How does the bond market affect mortgage interest rates?

Bonds affect mortgage interest rates because they both compete as investments. They are attractive to investors who want a fixed and stable return in exchange for low risk. There are three reasons bonds are low risk. First, they are loans to large organizations, such as cities, companies, and countries.Sep 8, 2016 read more

So even though higher bond interest rates caused mortgage rates to rise, it didn't slow down the housing market. When Mortgage Rates Affected Treasurys. The 2008 financial crisis forced Treasury rates to a 200-year low. It was one of the few times that mortgage rates affected U.S. Treasury rates. read more

The Federal Reserve, the nation’s central bank, monitors the behavior of the bond market and will intervene to stimulate the economy by lowering the mortgage rate. This is accomplished by buying enough mortgage bonds to lower the interest rate. read more

Conversely, when the bond market is weak, mortgage interest rates tend to increase, to make pools or securities more attractive to investors. This influence renders other consumer interest rates --auto, personal, home equity -- less important to affecting published mortgage rates. read more