What does weak economic news do to mortgage rates?

I often get asked this question? Will interest rates go up soon? Should I buy now? What does bad economic news do to the mortgage rates? 

Weak economic news normally causes money to flow out of Stocks and into Bonds, 

helping Bonds and home loan rates improve, while strong economic news normally 

has the opposite result. The chart below shows Mortgage Backed Securities (MBS), 

which are the type of Bond that home loan rates are based on. 



When you see these Bond prices moving higher, it means home loan rates are 

improving — and when they are moving lower, home loan rates are getting worse. 


So what does all of this mean for home loan rates? Remember that good economic news normally causes investors to move their money out of safer investments like Bonds—including Mortgage Bonds, which home loan rates are based on—and into riskier investments like Stocks to try and take advantage of gains. However, the Fed’s continued Mortgage Bond purchases as part of their third round of Quantitative Easing (QE3) and tame wholesale inflation data helped Bonds and home loan rates remain near record lows last week. 

The bottom line is that now is a great time to consider a home purchase or refinance, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you!