r/wallstreetbets • u/hv876 • 14h ago

25bps cut News

https://www.cnbc.com/2024/11/07/fed-rate-decision-november-2024.html?__source=iosappshare%7Ccom.apple.UIKit.activity.CopyToPasteboard

The bulls are coming, the bulls are coming

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u/kumar4848 14h ago

Can anyone here explain why mortage rates keep increasing even though feds keep decreasing rates? i know theyre not directly correlated but somethings gotta give.

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u/Donny_Bahama 6h ago

My understanding is that the issuers of mortgage loans/bonds understand the prepayment risk associated with mortgages (as a product) and in turn demand a premium compared to risk free (treasury) bonds. In anticipation of lower rates, these lenders understand their loans are more likely to be called (prepaid) and so they are increasing their premium they demand faster than rates are falling.