What Does My Mortgage Have to Do with Wall Street?
by Osman Parvez
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Why is it that the Fed is cutting rates but mortgage rates haven’t changed? Ever wonder what your mortgage has to do with Wall Street?
I could spend a long time writing about this subject. The simple answer is that a complex web of global financial institutions take monthly mortgage payments and repackage them into securities that other investors and institutions buy and sell. Because the relationship is indirect, the impact to mortgage rates is not linear. A quarter point cut to the discount rate doesn’t necessarily translate to a quarter point cut in mortgage rates. Here’s a chart that does a great job of illustrating some of the relationships between your mortgage payment and Wall Street. Click the image for a larger view.
Source: IMF’s Report on Global Financial Stability
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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties. We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.
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More about the author
Osman Parvez
Owner & Broker at House Einstein as well as primary author of the House Einstein blog with over 1,200 published articles about Boulder real estate. His work has appeared in the Wall Street Journal and Daily Camera.
Osman is the primary author of the House Einstein blog with over 1,200 published articles about Boulder real estate. His work has also appeared in many other blogs about Boulder as well as mainstream newspapers, including the Wall Street Journal and Daily Camera. Learn more about Osman.
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