Sr. Mortgage Loan Originator #AK205946
Alaska USA Mortgage Company #AK157293
Phone: (907) 646-6359
Fax: (907) 375-4880
Why Bad News Can Be Good for Mortgages
There's actually a pretty simple explanation for this seemingly strange phenomenon. To help explain why, YOU Magazine turned to Sue Woodard, president of publishing and content for Mortgage Success Source, and a nationally-recognized speaker and teacher in the mortgage industry.
But, like Sue says, you need first to understand a couple of important financial concepts:
1) Big money managers, in search of higher returns, avoid holding onto cash by investing in both stocks and bonds, and
2) Mortgage rates are based on the performance of mortgage-backed securities, a type of bond. (See Your Mortgage February 2008 for a full explanation.)
This means that whenever the economy is on fire and there are good economic reports along with positive economic news, investors tend to put more money into stocks, which are more risky but generally offer higher returns. To do this, however, investors must remove some of their money from less-risky bonds. This decreased demand in bonds causes bond prices to worsen, which causes home loan rates to increase.
License AK# 157293 Washington Consumer Loan Company license# CL-157293 California Residential Mortgage Lending Act, License# 4131067
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|Alaska USA Mortgage Company #AK157293
500 West 36th Ave., Ste. 110
Anchorage, AK 99515
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