Why Are Mortgage Fees Correlated With the Yield on Long-Term Treasury Bonds?
The correlation between mortgage prices and Treasury bond prices is ultimately decided by where investors want to spend their cash. The structure of the mortgage system in the USA places mortgage rates in competition with the prices paid on U.S. Treasury bonds. The interest rate trends on Treasury bonds may be used to roughly predict the rate trends for fixed-rate mortgages. Function Most home mortgages, especially those covered by the Federal Housing Administration (FHA), are packed into mortgage pools and…