What is the Ten year treasury bond and how does it effect mortgage rates?
Answers:
A Treasury Bond is basically an IOU that the government of the United States issues when it wishes to borrow money. For the Ten year T-Bill, maturity is ten years after issue, which is when the government will wage back the cash.
Basically, masses mortgages with adjustable rates are linked to the 10 year T-Bill because of its length. T-Bills next to shorter terms tend to be more variable and enjoy lower interest rates (the ability to cash them within sooner eliminates the need to protect the investor against inflation), while the 30 year is terrifically rarely issued and as such, is not a good issue to join to.
They are bonds issued when the government borrows money for a 10 year period. The average 30 year mortgage get repaid in 10 years so mortgage rates tend to go up and down surrounded by the market in like pattern.
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