Odd Lots
Why a 'Broken' Mortgage Market Is Keeping Borrowing Rates Extra High
It’s more than just higher benchmark interest rates.
A home for sale in Aurora, Colorado, US. US mortgage rates have jumped to the highest since 2001.
Photographer: Chet Strange/BloombergThis article is for subscribers only.
To understand the highest mortgage rates in two decades, look to the intricacies of the market for bonds backed by home loans.
So says Guillermo Roditi Dominguez, managing director at New River Investments LLC. On the latest episode of the Odd Lots podcast, he describes how the surging cost of home loans can be traced to changes in the market for mortgage-backed securities, or MBS. The average rate on a 30-year fixed mortgage jumped above 7%, according to data released on Wednesday. That’s the highest since 2001.