How to get the lowest interest rate possible?  Here are some basic rules of thumb for watching mortgage interest rates:

Follow the Money! Interest rates follow the money flow.  Fixed rates are all about the 10 year Treasury note. Treasuries have 2 factors: price and yield. They are inversely proportionate.  If yield goes up price goes down and vice versa.

Here is the key: rates are closely linked to the 10-year yield.

If investors are profit taking in the stock market, that excess capital flows to short term Treasuries. The demand on Treasuries rise and the 10-year yield goes down.  Conversely if the stock market is doing great, the money flows back into stocks, making the treasury market less attractive.  When this happens the only way to sell treasuries is to increase the yield to attract investors.  You got it, mortgage interest rates go up!

To get a low mortgage rate watch for a big profit taking in the stock market – that should get you on the right path to follow the money.

By Bill Grasska, Teles Financial/ www.telesfinancial.com. For more information, please contact Bill Grasska at 310-442-4040 or email him directly at bgrasska@telesfinancial.com.

Filed under: Uncategorized on August 28th, 2009