Mortgage rates are moving again

The Little-Known Reason Why Mortgage Rates Are Rising This Week (And Why They May Go Higher Still)

Posted: 30 Jul 2009 08:00 AM PDT

After starting the week with a run lower toward 5 percent, mortgage rates have reversed course.

It started mid-day Tuesday and the culprit is Basic Economics. Here's why.

Mortgage rates are based on the price of mortgage-backed bonds and -- like most things -- mortgage-backed bonds prices are based in Supply and Demand.

When bond supplies grow faster than the corresponding demand for them, bond prices tend to fall and when bond prices are down, bond yields are up.

Meanwhile, this week, the U.S. Treasury is making its largest weekly auction in history. $115 billion in new debt, to be exact. This means that before the week is through, $115 billion in new bond supply will have been introduced into the market and -- so far -- demand hasn't kept pace with the new supply.

Prices are plunging.

For home buyers and rate shoppers, this is especially bad news because mortgage-backed debt is less desirable to investors than is treasury debt. As a result, when treasury debt loses values, mortgage-backed debt tends to lose value, too. Not always, but most of the time.

So, beginning with Tuesday afternoon's auction, debt supplies have been growing faster than buyer demand.

Bond markets are suffering from an abundance of debt supply and it's been a big reason why mortgage rates are rising. The week's not over yet, either. $28 billion is due for auction Thursday.

If demand at the auction is similarly low, watch for mortgage rates to spike again.

How not to Lose Your Good Credit in Divorce

Don’t Lose Your Good Credit in Divorce

by admin

Divorces are going up and credit ratings are going down. Good credit is one asset you must diligently protect during divorce. You’ll lose your good credit if your spouse runs up huge bills on your charge accounts and credit cards. It’s difficult to financially cope during the turmoil and expense of divorce, but three timely steps can protect you from losing your good credit.

First, immediately notify your creditors that you will no longer be responsible for your spouse’s debt. Secondly, destroy and revoke all credit cards on which you have liability. Don’t assume you’re not responsible for your spouse’s credit card debts. You probably guaranteed these credit obligations. Finally, publicly disclaim all liability responsibility for your spouse’s future debts. Most states consider public notice sufficient to inform third parties that you reject liability for future debts incurred by a spouse. Check your state laws. Also, accept your own credit responsibilities. If you can’t punctually meet your obligations during your divorce, tell your creditors before you default. Let your creditors know the reason for your financial problems, but make small, timely installment payments to show good faith. Most importantly, request that your creditors not to report your defaults to the credit bureau.