How the stock market impacts mortgage rates

1. Mortgage Loan Interest Rates

2. How the stock market impacts mortgage rates

3. There is an inverse relationship between the price of MBS's and mortgage rates. When the price of MBS's increase mortgage rates drop and vice versa. • So, to understand how the stock market can influence mortgage rates we have to understand how they impact the price of bonds. • Stocks and bonds compete for the same investment dollar. In other words, an investor with money to invest has to make a decision to invest their money in . • Either the stock market or in the bond market (it should be noted that there are other investment options but these two classes are the primary vehicles for investment capital).

4. For an investor stocks are generally thought to provide higher returns over time but also come with greater volatility. • Conversely, bonds tend to have lower returns over time but have less volatility. • Because bonds tend to provide low volatility with modest returns the bond market. • can often act as a "safe-haven" for investors who sell their stock positions.

5. Therefore, in general, when the stock market goes down it is a sign that investors are selling stocks and shifting their capital into bonds. • This boosts bond prices and drives mortgage rates down. Conversely, when the stock market rallies it is a sign that investors are selling bond positions in order to shift capital into the stock market. • The greater supply of bonds on the market drives prices lower and pushes mortgage rates higher. • It's important to understand that there are a myriad of factors that impact Mortgage Loan Interest Rates on a day-to-day basis.

6. Click to know more on Mortgage Loan Interest Rates: https://www.hdfc.com/non-housing-loans/loan-against-property-salaried Thank You…