new mexico real estate library new mexico land for sale new mexico ranch sellers guide
nm farm land
nm homes
ranch property
farm land
horse property buyer guides

The Relationship of Mortgage Rates and Economic and Financial Market Events

Return to the Real Estate Library

Due to the fact that a mortgage loan is a long term debt, the Treasury bond market (debt issued by the federal government) is used as a benchmark for determining appropriate values of a mortgage loan.

The selling of mortgage loans to investors is referred to as the "secondary mortgage market". Mortgage loans are sold to these investors when a lender has loaned out all of its available funds. This secondary mortgage market must be competitive with similar investment markets in order to find investors.

Inflation is the primary factor that affects the Treasury bond markets and interest rate levels. Inflation also effects the value of investor's fixed return investments. Treasury bond investors do not like inflation because it diminishes the value of their fixed return investments.

The threat of inflation is subdued when the economy slows down. When inflation is lowered then investors become more comfortable investing in long term debt and the Treasury bond market rallies.

When the price of a Treasury bond moves higher on weak economic news an investor is forced to pay more for this investment.

When the bond moves higher the yield which is the return on investment to the investor declines. This decline causes the yield on all similar investments including mortgage loans sold in the secondary market to decline as well.

If a lender can sell mortgage loans at a lower interest rate to investors, the lender is likely to pass on these lower rates to you, the borrower.


nm farms


Premier Ranch Properties

P.O. Box 987
Berthoud, CO  80513
Phone 844-363-0520

Email: contactus@nmranchproperties.com

Susan Johnson
Owner/Qualifying Broker
Cell 505-469-4303

Jay Platt
Associate Broker
Cell 575-740-3243


Facebook  Twitter  Google Plus  YouTube

imcd web design company - real estate website design by imcd
copyright © 2008, all rights reserved
NM
Real Estate Search         Buyers         Sellers         Blog        Community         Ranch Resources         Finance         Company         Contact         Home
acreage
ranch properties
home Contact Us property listing search