If the Fed dropped the rate a half a point, why oh why did the mortgage rates go up!

 

I just read an interesting article in AP with the Chief Economist from FreddieMac giving the lowdown on the rates game. He basically said that the 30 year fixed mortgage rate is connected with the long term bond yields. When stocks go down, investors buy treasury bonds which lower the yields.  Therefore reducing the mortgage rates linked to those yields.  When the market goes back up, investors pull their money out of the bonds which increases the yield and thus increases mortgage rates.

 

Other experts say that the banks are just not lending and hoarding the cash cows they are receiving from the government.

 

Wow, I am sure that is what the average American wants to hear and understands the situation. So, it seems that Wall Street is still regulating the mortgage industry and the Fed cannot do anything to stop it!

  

Dale Siegel