Fed rates vs mortgage rates

Loan Doctor · 03-22-2008, 10:52 AM

This chart gives an idea of what happens with Mortgage Backed Securities vs Fed Funds & Prim. The trend is close but monthly (and for sure daily) movements are much different. Interesting to note that in 04 the spread between ARMs and Fixed was massive compared to today. Just an indication that the "Market" does not like ARM's much.

Just a general rule of thumb is that as the stock market goes up, mortgage rates will go up and MOST of the time the reverse is true. Interest rates don't like inflation much, so that interferes & etc.

Charles

Hedwig · 03-22-2008, 05:17 PM

Good info. As we discussed in another thread, most people really don't understand how various interest rates are related not only to the prime, but to the fed funds rate.

In fact, many people don't even know there's a difference between the two.