My notes as I explore various business and financial topics

Monday, May 24, 2010

Mortgage Rate Boon May Herald Further Economic Trouble

Mortgage rates reached a new low last week approaching their lowest level in 50 year. Although these record rates may help the housing sector recover, a growing number of investors read it as a sign for more economic miasma.

Mortgage rates are tied to long term U.S. Treasury, such as the ten year bond. And a drop in bond yield stems from investors moving money out of the stock market and into safe bond investments (raising bond prices and thus lowering the yield rate).

Bond rates are hovering around 3.2%. Many analyst are bracing for them to hit 3%. What remains unkown is if investors expect a the recession to extend for more years, or are simply nervous over current financial conditions such as the Greek financial crisis, or U.S. jobless rates.


Bonds Ring Economic Alarm Bells - CNN Money
Surprise Drop in Mortgage Rates - WSJ

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