What’s Driving Mortgage Charges The Week Of Aug. 16-20, 2021
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Mortgage rates have been hovering near all-time lows for months. Economists expect interest rates to rise by the end of the year, but there is no clear trend. Here’s a look at what could move the markets this week.
On Wednesday, the US Census Bureau released its July building permits, home starts and completions report. The data itself isn’t driving mortgage rates, but the statistics reflect the state of the housing industry – which is characterized by record-low inventory levels and rising house prices.
Also on the horizon are weekly unemployment claims data on Thursday. And as always, mortgage rates and 10-year government bond yields are hanging on the hip.
Mortgage rates rise and fall based on market sentiment, headlines and a variety of economic indicators. The math behind interest rates is complicated, but here’s a simple rule of thumb: The 30-year fixed-rate mortgage is closely aligned with the yield on 10-year government bonds. When that rate goes up, the popular 30-year fixed-rate mortgage tends to do the same.
Fixed-rate mortgage rates are affected by other factors such as supply and demand. When mortgage lenders have too much business, they raise interest rates to reduce demand. When business is weak, they tend to lower prices to get more customers.
Ultimately, the interest rates are set by the investors who buy your loan. Most US mortgages are packaged as securities and resold to investors. Your lender is offering you an interest rate that investors are willing to pay in the secondary market.