11/16/2022
Banks, foreign buyers and money managers have stepped back from buying mortgage bonds as has the Fed, the largest investor in that market, widening the spread that mortgages trade at versus Treasuries, which directly translates to the borrower’s mortgage rate helping to push mortgage rates to their highest level in 20 years. Some banks are also opting to hold mortgages, instead of mortgage bonds, on their books.
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Banks went on a mortgage-bond buying spree last year, but now they are stepping back from the market, fueling higher rates.