What Influences Mortgage Rates?
by Emily Zachariasen, Bank of America Loan Consultant

My Clients often ask me, "What drives interest rates?"  The truth is that mortgage interest rates are determined by investments sold on Wall Street known as mortgage backed securities or mortgage bonds.  Mortgage backed securities are generally considered a safe, conservative investment, more or less in the same league with savings bonds and treasury bills.  When investors feel nervous about the economy, they tend to put more money into bonds, including mortgage bonds.  When they're feeling confident about the economy they pull money out of bonds and invest in stocks.  When more traders invest in bonds, the age old rule of supply and demand tells us that the price of bonds rises, which causes mortgage interest rates to fall.  The going price for mortgage bonds translates directly to the rate you pay for your mortgage.  The current economic environment is both volatile and unprecedented.  It's difficult to predict what interest rates are likely to do in the coming months.  So my best advice is to be sure you're working with a lender who understands the financial markets, how they move rates, and who can ultimately help you best navigate in these exciting and uncharted waters.

Contact Emily Zachariasen at 406-721-0616 ext. 221 for the most current and competitive mortgage rates or check out her website for more information.