What’s driving mortgage rates the week of September 19-23, 2022

After rising sharply at the start of 2022, mortgage rates have stabilized somewhat. Here’s a look at what could move the markets this week.

On Wednesday, the National Association of Realtors will release its home prices and sales report for August. The report itself does not determine mortgage rates, but the data will provide new insight into the record housing market. Trade group Realtors said last month that home prices have risen 11% over the past year, while inventory of homes for sale has risen from record lows seen earlier in 2022.

As always, mortgage rates and 10-year government bond yields will be joined at the hip. Mortgage rates rise and fall based on market sentiment, headlines and a variety of economic indicators. Calculating rates is complicated, but here’s a simple rule: the 30-year fixed rate mortgage closely tracks the 10-year Treasury yield. When that rate goes up, the popular 30-year fixed rate mortgage tends to do the same.

Fixed mortgage rates are influenced by other factors, such as supply and demand. When mortgage lenders have too much business, they raise rates to reduce demand. When business is light, they tend to lower rates to attract more customers.

Ultimately, the rates are set by the investors who purchase your loan. Most US mortgages are presented in the form of securities and resold to investors. Your lender offers you an interest rate that secondary market investors are willing to pay.

About Marilyn Perkins

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