What Really Determines Interest Rates?

The Federal Reserve actions have little, if any, direct impact on traditional long-term mortgages.For loans like the 30-year fixed mortgage, what really matters is what lenders think is going on with inflation.

The 10-year Treasury note is among the most widely watched indicators of long-term interest rate trends, but investors will often look at the so-called “swap rates” that banks charge each other when trading long-term and short-term loans. But looking at historical movements in the federal funds rate along with the yields on 10-year Treasury notes and the 30-year fixed mortgage rate helps to show how little connection exists between the federal funds rate and long-term mortgages. (Read More)

Source: NY Times

Tags: mortgages, federal reserve, Mortgage Tips