UNDERSTANDING MORTGAGE RATE INDICATORS:
According to Kate Logue of Presidential Mortgage, weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. Home loan rates are based on Mortgage Backed Securities (MBS), a type of bond.
When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.
To go one step further, MBS may worsen or improve during a single day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets lenders start with each morning.
Mortgage Bonds have not had a good run recently. Despite this, home loan rates are still in attractive territory.