Okay this is a tough one, but there are many factors that go into mortgage rates dropping all of which you can find by scrolling through this great site, but here are a few just to get you the 101 course.
Many think and say the 10 year treasury is what to watch when determining the road ahead for mortgage rates even knows this is somewhat true it is not the only factor but a good indicator. Usually if the 10 year treasury yield is up the rates are going up if the yield is down rates are going down but factors can cause this to not be true?
The main one is what this whole site is based on MBS (mortgage backed security bonds.) This is another yet factor in the direction of rates if the spread between the MBS bond and the 10 year treasury bond Is tight then that is a good thing for rates so sometimes you will see after a day that the 10 year treasury yield jumped the MBS bond was already ahead of it and waiting for ol' 10 year to catch up so rates will not move higher you with me so far? If the price of a certain MBS bond is high say the 4.5% is priced at 100.989 then goes up to 101.22 in one day well that means good things for rates to go lower toward that 4.5% range cause that is the coupon that is selling. And we all through a party that day!
Another thing that people seem to over look is inflation; if inflation is high interest rates are going to be high. Also there is the VIX or Volatility Index, if there is a high volatility rate then lenders usually will price higher due to the uncertainty.
Now of course things are more complex than you and I even know than the above factors but this is all the indicators I watch and this site to tell me what rates direction is going to be and usually holds true. But sometimes lenders get backed up or there wholesale line runs out and they just higher rates to stop from new loans coming in we can never determined that, it just happens.
If you’d like know more about daily mortgage rate movements and why they’re moving, you can read the following:
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