A Broken Market Is Causing Mortgage Rates to Surge

Odd Lots

Bloomberg

News, Investing, Business, News Commentary, Business News

4.4 • 1.6K Ratings

🗓️ 27 October 2022

⏱️ 50 minutes

🔗️ Recording | iTunes | RSS

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Summary

US mortgage rates have jumped to a two-decade high, with the average 30-year home loan now running above 7%. Of course, this makes sense. The Federal Reserve is raising benchmark interest rates and that's supposed to translate into a tightening of financial conditions, which includes housing credit. But the jump in mortgage rates far exceeds the increase in benchmarks, with the difference between average mortgage rates and the yield on equivalent US Treasuries at its highest on record. So what's going on? On this episode, we speak with Guillermo Roditi Dominguez, managing director at New River Investments, about what's happening deep in the market for mortgage-backed bonds to make rates surge this much. As he describes it, a sea change is helping to keep borrowing rates extra high.

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0:00.0	Do you know what your interest rate is on your savings account?
0:02.7	I bet it's lower than you think.
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