A common misconception held by most real estate agents is that the 10-year US treasury note drives mortgage rates. Some loan originators believe that to be fact as well.
That statement isn’t true.
Mortgage-backed securities (MBS), or mortgage bonds, cause mortgage rates to fluctuate. Often mortgage-backed securities act in concert with the 10-year U.S. treasury note; most fixed-income securities do. Sometimes, they move in opposite directions; that’s when the folks that follow the 10-year treasury note get caught with their pants down.
Consider this first chart, provided by StockCharts.com:
It’s easy to see that Continue reading this post