Greg vanslow talks about Treasuries and rates

Treasuries do not directly relate to mortgage rates.

 

Most mortgage rates are driven by mortgage backed securities (MBS). The MBS is what mortgages turn into on Wall Street.

Mortgages are packaged into bundles by Fannie, Freddie and Ginnie and then sold as securities.

The price of those securities drives mortgage rates. Mostly. There are other factors.

 

Treasuries are a competing investment and considered safer.

So, if someone has a between a treasury and an MBS, the MBS yield has to be higher than Treasuries.

So, if Treasury yields go up, so will MBS yields and mortgage rates.

They aren’t tied together, though, and it has not at all been uncommon for Treasuries and MBS to go in opposite directions. But not for long.

 

As to return, there are many, many different treasuries.

They have terms from one month to 30 years.

There are TIPS (treasury inflation protected security).

 

Yields range from negative yield for some TIPS to 3.89% for a 30 year treasury.

Which would have a yield of $3890 for one year.

 

Does that answer your question?

 

 

Greg Vanslow

Mortgage Planning Specialist

Princeton Capital

Telephone  (650) 917-4263  |  Mobile  (650) 537-7905  |  Private Fax  (408) 335-1176

NMLS# 280209

http://princetoncap.com/gregvanslow

 

Princeton Capital is a Residential Mortgage Lender, and an RMR Financial company, licensed by the California Department of Business Oversight under the California Residential Mortgage Lending Act, license #415-0027.

 

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