Mar
04

Mortgage Money

While interest rates on Treasuries have hit all-time lows, mortgage rates have fallen, but not as much. There are at least three reasons. First, if rates keep falling, prepayments will increase, hurting mortgage investors. Second, lower rates suggest the economy is weakening and that can boost defaults, hurting lenders. Third, with re-fi demand already sky-high, lenders need not juice it with yet lower rates, which would needlessly reduce profits.

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