WHY ARE MORTGAGE RATES SO VOLATILE? (EXPLAINED SO HUMANS CAN UNDERSTAND)

Mortgage rates are the interest rates that lenders charge borrowers for home loans. These rates have been known to fluctuate, with some periods seeing much more volatility than others. In recent times, mortgage rates have been particularly volatile, with rates going up and down rapidly. Here are some of the reasons why this is happening:

1. Economic uncertainty: The Covid-19 pandemic has caused major disruptions to the global economy. The uncertainty around the pandemic's impact on economic growth and inflation has led to a lot of volatility in the financial markets, including the mortgage market.

2. Inflation expectations: Inflation is a measure of how much the prices of goods and services are increasing over time. As inflation expectations rise, so do mortgage rates. With many central banks around the world adopting accommodative monetary policies in response to the pandemic, there are concerns about rising inflation.

3. Bond market movements: Mortgage rates are often tied to the movements in the bond market, particularly the yield on the 10-year Treasury note. As the bond market moves, so do mortgage rates.

4. Housing market conditions: The housing market is subject to many factors, including supply and demand, demographics, and government policies. Any changes to these factors can affect mortgage rates.

5. Lender competition: Mortgage lenders compete with each other for business. As a result, they may adjust their rates frequently to remain competitive.

In conclusion, there are many factors that can contribute to the volatility of mortgage rates. Economic uncertainty, inflation expectations, bond market movements, housing market conditions, and lender competition are all key factors to watch. It's important for prospective homebuyers and homeowners to stay informed about these factors and work with their lenders to understand their options for securing the best rates possible.