August 4th, 2020 was the best day ever for mortgage rates.  That’s when we hit the lowest all-time lows we’ve ever seen, and none of the most prevalent news stories about all-time lows since then have been technically accurate.  What’s going on here?

So many things… but they’re not too complicated.

First off, there is no universal mortgage rate.  The closest thing to a purely universal benchmark that will ever exist is the trading price of the bonds that underlie the mortgage market.  These bonds (mortgage-backed securities or MBS) determine how much mortgage loans are worth to investors, thus setting the boundaries of mortgage lender profitability.  In other words, there’s a certain line in the sand for mortgage rates below which a lender is losing money.  The only objective and universal contributor to that line is the aforementioned price of MBS.

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