November 18th, 2011 8:16 AM by Steve Iltis
Mortgage interest rates generally follow the 10 year US Treasury rates which are influenced by overall economic conditions. For example, the financial crisis in Europe creates a flight to safety resulting in the purchase of US Treasuries which lowers their yield and as a result mortgage rates decrease. Conversely, once the financial community feels that the crisis is no longer an issue , money will flow out of Treasuries into riskier investments and as a result interest rates will increase. Generally, favorable economic news has the effect of increasing interest rates and unfavorable news or conditions will lower rates.