Posted To: Mortgage Rate Watch
Mortgage rates rose fairly sharply to begin the new month as a large corporate bond sale indirectly hurt the bonds that dictate mortgage rates. When a company (in today’s case, pharmaceutical giant Actavis) issues debt, it can hurt mortgage rates in two ways. First, and most basically, mortgages are ultimately “debt” as well. Although there are many nuances, generally speaking, after mortgages are packed into securities, investors buy those securities in order to earn interest. Quite simply, if mortgage debt has more competition from other debt (like this big corporate bond offering), prices and demand can fall as investors are enticed to buy the other offerings. Lower prices on mortgage debt mean higher rates for consumers. An even more direct effect of the corporate bond offering is that…(read more)
Via:: Mortgage Rates Back up to 3.875 Percent
