Mortgage Shopping Guide

The ONLY correct answer is that mortgage rates are based on Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.

A professional lender will have this at their fingertips. At Meridian Home Mortgage, in addition to tracking mortgage backed securities using the latest technologies, we are carefully reviewing all weekly economic reports and events which cause mortgage rates to fluctuate.

The answer may surprise you. When the Fed makes a move, they can change a rate called the “Fed Funds Rate” or “Discount Rate”. These are both very short-term rates that impact credit cards, home equity credit lines, auto loans and the like. On the day of the Fed move, mortgage rates most often will actually move in the opposite direction as the fed change. This is due to the dynamics within the financial markets in response to inflation.

If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-day price change, you are talking with someone who is still reading yesterday’s newspaper, and probably not a professional with whom to entrust your home mortgage financing.

Would you work with a stockbroker who is only able to grab yesterday’s paper to tell you how a stock traded, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future? No way!