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Mortgage Rates Expected to Decrease, but Market Developments Could Limit Benefits for Homebuyers

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Mortgage Rates,Homebuyers,Financial Instruments

Mortgage rates are predicted to decrease later this year, but the impact on homebuyers may be limited due to developments in the mortgage-backed securities market. Uncertainty about inflation and mortgage rates has led to higher yields for mortgage-backed securities compared to government bonds. Mortgage-backed securities are investments composed of home loans that pay interest to investors.

Mortgage rates are expected to come down later this year, but any benefit to homebuyers could be muted by developments in the market for financial instruments tied to mortgages. Over the last couple of years, uncertainty about inflation and the trajectory of mortgage rates led investors to demand a fatter yield for owning mortgage-backed securities relative to what they would get buying the government’s 10-year Treasury bonds.

Mortgage-backed securities, or MBS, are investments made up of home loans and, like bonds, pay interest to investors

 

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Mortgage Rates Expected to Decrease, but Market Developments Could Limit Benefits for HomebuyersMortgage rates are predicted to decrease later this year, but the impact on homebuyers may be limited due to developments in the mortgage-backed securities market. Investors have been demanding higher yields for mortgage-backed securities compared to government bonds, affecting the overall mortgage market.
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