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Albert Sung is the author of the Katchum Macro-Economic Blog, monitoring breaking economic news from a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at... More
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Katchum's Macro-economic blog
  • Correlation Between Mortgages And Bond Yields 0 comments
    Mar 22, 2013 2:32 PM

    Just wanted to add another couple of correlations to my collection. We will learn about fixed and adjustable rate mortgages. These are correlated against treasury yields and fed funds rate respectively.

    1) Conventional (Fixed) Mortgage Rate Vs. Treasury Yields

    As you can see mortgage rates are always higher than treasury yields because U.S. treasuries are considered much safer than mortgages.

    (click to enlarge)
    Chart 1: 30 Yr. Treasury Yield Vs. 30 Yr. Mortgage Rate

    2) Adjustable Rate Mortgages Vs. Fed Funds Rate

    Adjustable Rate Mortgages on the other hand are linked to the Fed Funds Rate.

    (click to enlarge)
    Chart 2: 1 Yr. Adjustable Rate Mortgage Vs. Fed Funds Rate
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