Bond Markets / Bond Market Effects on Interest Rates
Today I'll explain some bond market effects.
Many people don't know much about the bond markets. Why? they are very boring. They never seem to move too much and you never hear anyone get too excited about the change in the bond market. The irony is, the bond markets effect many more people directly than the stock markets and the cost or savings to you, the average consumer, is actually quite great.
Since loan interestrates are directly coorlated with the bonds, ie. the 30 year, 5 year, 15 year, and 10 year treasury bonds, this effects most of you today, we'll maybe not if your locked in on a fixed rate 30 year mortgage, but even if you are, it still has an effect. Credit card rates can be dictated by bond markets and the fed funds rate so even if your solid on your home loan situation, it may still be good planning to know where your credit card rates are going. We can tell you, they are going up! Slightly anyway.
It appears that the fed recently gave some information that there may only be one more increase in fed funds rate over the next few months. This has sparked a mild interest in bond markets which has kept rates at bay for now. But if you or someone you know is on an arm or has a adjustable equity line, now is the time to get into something safe or at least prepare yourself.
If you would like to check out a bond price, you can do so by going to http://www.msn.com and typing in TC10Y in the stock quote field. You will then get the 10 year treasury which is usually the best indicator of overall bond movement. For every 100 basis points it moves-up or down, this is about .125% in rate. However, please remember that it is an inverse relationship. If it goes down, interest rates go up, and if the bond goes up, then interest rates go down.
You can keep a close eye on interestrates by watching these movements if your interested.
Today a borrower with good 80% LTV, 640 credit score, and 40% debt ratio can get 6.25% cost free on 150,000 (30 year fixed) loan. NO CLOSING COSTS AT ALL, NOT TOO BAD.
Next time I'll discuss some things about LTV (loan to value) and things you may be really interested to know about home apraisals and how you can get the most value out of your home or homes.
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