The 10-yr treasury note's index value is 3.9 (on 11/28/07). I thought that the home mortgage rates are pegged to this note.
Why are the home mortgages still at 5.8 to 6.0 %?
2007-11-28 04:30:59 · 5 answers · asked by one72214 1 in Business & Finance ➔ Renting & Real Estate
because the banks are in the business of making money. they are businesses not government organizations.
this is just how it works - if a bank were to loan to another bank it would use a lower rate than consumer's rate because there is lower credit risk associated with the transaction, it works that way for foreign currency transactions too
individual consumer also pays more because the banks have to cover the overhead associated with the multiple small transactions
2007-11-28 04:35:33 · answer #1 · answered by mishkin 5 · 0⤊ 0⤋
You're right, usually the mortgage rates follow the 10 year numbers but we are in a very abberational market right now and all of the old rules are out the window and will continue to be until things settle down some.
2007-11-28 05:09:14 · answer #2 · answered by mazziatplay 5 · 0⤊ 0⤋
different companies have different rates what they peg them to usually they are at least 2 to 3 points higher then the treasury notes.
2007-11-28 04:35:35 · answer #3 · answered by LC 2 · 0⤊ 0⤋
"Pegged to" isn't the same as "equal to" - just means they go up and down with that index.
2007-11-28 04:34:01 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
Back taxes bro.
2007-11-28 04:33:48 · answer #5 · answered by Anonymous · 0⤊ 0⤋