NeWS to KnOW

The Federal Reserve began to slash short-term interest rates almost a year ago. Yet we have higher mortgage rates now than we had then. What gives? No single answer explains why some rates have fallen while fixed mortgage rates have climbed from an average of 6.43 percent a year ago to 6.6 percent this week. Among the several reasons, you can sum up the main one in two words: credit risk. Lenders behave cautiously now because they lent recklessly in previous years, leading to a surge of foreclosures.

What rates have done:

Traditionally, observers noted a link between 10-year Treasury notes and 30-year fixed-rate mortgages: When the 10-year Treasury yield went up, the 30-year mortgage rate went up, and when the Treasury yield fell, so did mortgage rates.