Mortgage interest rates, the rate spread and what it all means

One thing that tends to confuse home-buyers is mortgage interest rates. While the Fed (Federal Reserve Bank) can change the short-term interest rate, fixed rate mortgages are actually based on the “long bond” or 10-year Treasury bond.

Recently, there has been an unusual difference between the long bond and the fixed rate mortgages. Why, you ask? Well, the lending institutions are sort of hedging their bets. To protect their interests during this challenging time, many are essentially increasing the cost of mortgages. For more information, read this helpful article on usatoday.com or this one on CNNmoney.com.

For more information on the Boston real estate market, go to Gibson Sotheby's International Realty, Boston's real estate experts.