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Harley Bassman on Bond Market Dynamics, Derivative Strategies, and Long-Term Interest Rate Trends

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Understanding Mortgage Rates: The Real Costs Behind the Numbers

Mortgage markets operate with two distinct rates: the consumer-facing Freddie Mac rate, which directly affects homebuyers, and the mortgage bond rate, crucial for lenders. The spread between these rates typically hovers around 75 basis points, reflecting the costs associated with guaranteeing loan delivery and repayment. Understanding this spread is essential for grasping the underlying mechanisms of mortgage financing and its implications for reducing rates and ensuring the stability of the housing market.

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