Are MORTGAGE RATES going up ...?

Why Do Mortgage Rates go up and down

Mortgage rate intro - why mortgage rates go up and down

The mortgage lender that funds your loan may be a bank, credit union, or other type of financial institution.

Once the loan is funded, the bank, credit union, or other... has the option of keeping that loan in its portfolio or selling it on the secondary market. If the the bank, credit union, or other financial institution keeps the loan, it makes money from the interest you pay each month. If the loan is sold, the bank, credit union, or other financial institution replenishes its funds and can make more loans to other homebuyers. Basically, the secondary market investors keep funds circulating, for new mortgages.

Mortgage interest rate investors?

Today's secondary market investors include government chartered companies like Fannie Mae and Freddie Mac, plus insurance companies, pension funds, and securities dealers. Although Fannie Mae and Freddie Mac are different organizations, they participate in similar activities. Both can buy mortgages, and both can group mortgages together for resale in what's called mortgage backed securities. These are highly liquid investments, that can be easily bought and sold. Just ensure that your bank or lending institution is not involved with improperly rated sub prime mortgage backed securities, that actually have little to no equity or value. Many banks have recently collapsed due to this.

These investors ( insurance companies, pension funds, and securities dealers ) want to earn the best return possible. When the economy is on an upswing, future yields are expected to be better than current yields. Investors, therefore, will hold off buying until higher yields materialize. This drives mortgage interest rates up, because lenders cannot sell their loans at lower yields.

Conversely, when the economy is in a downturn, investors buy up what's available to avoid being stuck with lower yields later. This drives mortgage rates down, as investors buy before yields get too low.

What this means to you... By staying on top of financial trends and planning accordingly, you can time your rate lock and get the best mortgage rate possible. Given the current state of the economy, and the related ongoing financial crisis, mortgage rates have been at all time lows...Now is the best time to lock in the mortgage rates.

The Best time to lock in the mortgage rate is now..

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