Calendar: Factors Affecting Mortgage Rates for the week of July 12-16, 2021

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Mortgage rates they are notoriously difficult to predict. They rise and fall depending on market sentiment, news headlines and various economic indicators. Here’s a look at what might be driving the markets this week.

Important economic news comes on Tuesday, when the US Labor Department releases its June inflation report. Inflation jumped to 5 percent in May, and economists are arguing over what that means. Have prices skyrocketed simply because economic activity stalled last May due to a forced lockdown due to the coronavirus? Or are huge stimulus packages driving up prices?

Although inflation does not determine mortgage rates, the two are related. And economists say the steady rise in consumer prices will be accompanied by a hike in mortgage rates, which hit record lows in January.

Calculating mortgage rates is tricky, but here’s one simple rule of thumb: A 30-year fixed-rate mortgage is exactly the same as the yield on 10-year Treasury bonds. When that rate rises, the popular 30 year fixed rate mortgage tends to do the same.

Fixed mortgage rates depend on other factors such as supply and demand. When mortgage lenders have too many businesses, they raise rates to reduce demand. When things go easy, they tend to cut rates to get more customers.

Ultimately, the rates are set by the investors who buy your loan. Most US mortgages are packaged in securities and resold to investors. Your lender offers you an interest rate that secondary market investors are willing to pay.

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