Rising Interest Rates and Rising Stock Market Do Not Compute!
Do we need a "wake up call"? Since the beginning of the year to present, interest rates on 10-year US Government Bonds have risen 3/4%, give or take a few basis points or so (100 basis point equal 1 % point). SO WHAT? Well the current yield of the 10-year T-bond is the rate mortgages are based upon. Rising rates also are one of the measurements that banks and mortgage lenders use to determine their willingness to make loans either for their portfolio or to sell in the open market. Once mortgage originators find an unwillingness to buy mortgages, interest rates must rise to make the buyers willing to take on the potential of higher rates. The Federal Reserve has been the buyer of last resort that has kept interest rates down. The FED has failed to stop the dramatic rise in rates. The FED has not accelerated its buying of mortgages in the after market. Pension funds and investment companies who are the normal sources of buyers of mortgages have been reluctant to buy mo