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Why Rates Jumped After Good News

Friday, June 21, 2013 - Article by: Kiernan - The Mortgage Advocate - Message

As you saw in my last post rates have Skyrocketed. The FED has stated it will keep buying bonds at the current rate of $85 Billion per month. Why are rates going up with this good news? Rates are going up because the FED has stated that it will start tapering off bond buying by 2014. This has investors pulling money out of the market. The FEDs bond buying has created limited inventory of Mortgage Backed Securities (MBS). Low MBS inventory equals low rates. Exoectation of high MBS inventory equals high rates. This should help explain higher rates with good news.

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