Intermediate terms

Essential Mortgage Market & Bond Terms

This curated collection includes key terms that might be helpful when exploring how mortgage rates are determined and their connection to the bond market. It breaks down the foundational concepts and market forces influencing your borrowing costs. These terms were selected based on common questions and areas where investors often need clarity.

Learning Path

Economic Indicators

Key data points that reveal insights into the current and future health of an economy, used by real estate investors to forecast market trends, assess risk, and inform investment decisions.

Intermediate13-14 min

Secondary Mortgage Market

The secondary mortgage market is a financial marketplace where existing mortgage loans and mortgage-backed securities (MBS) are bought and sold by investors, providing liquidity to primary lenders and influencing interest rates.

Intermediate13-16 min

Yield

Yield in real estate measures the annual income generated by an investment property as a percentage of its cost or equity, providing a key indicator of its income-producing efficiency.

Intermediate13-16 min

Mortgage Rate

A mortgage rate is the interest percentage charged by a lender on a home loan, directly determining the cost of borrowing and influencing monthly payments and total repayment amount.

Beginner12-13 min

Bond Market

The bond market is a financial market where debt securities are issued and traded, influencing interest rates, mortgage costs, and property valuations for real estate investors.

Intermediate13-17 min

Treasury Yield

Treasury yield is the return an investor receives on U.S. government debt securities, serving as a key benchmark for interest rates across the economy and significantly influencing real estate financing and valuations.

Intermediate13-14 min

Federal Funds Rate

The Federal Funds Rate is the target interest rate for overnight lending between commercial banks, influenced by the Federal Reserve to manage inflation and employment, and serving as a benchmark for other interest rates, including mortgages.

Intermediate12-15 min

Adjustable-Rate Mortgage

An Adjustable-Rate Mortgage (ARM) is a home loan where the interest rate can change periodically based on an index, leading to fluctuating monthly payments after an initial fixed-rate period.

Beginner14-15 min

10-Year U.S. Treasury Note

The 10-Year U.S. Treasury Note is a government debt security with a 10-year maturity, whose yield serves as a critical benchmark for long-term interest rates, including mortgage rates, and reflects broader economic expectations.

Intermediate13 min

Fixed-Rate Mortgage

A fixed-rate mortgage is a home loan with an interest rate that remains unchanged for the entire loan term, providing stable and predictable monthly payments.

Beginner13-14 min

Monetary Policy

Monetary policy refers to actions taken by a central bank, like the Federal Reserve, to manage the money supply and credit conditions, influencing interest rates, inflation, and ultimately, the real estate market.

Intermediate13-14 min

Lender Spread

The lender spread is the difference between the interest rate charged on a loan and the lender's cost of funds, encompassing risk premium, operational costs, and profit margin. It directly impacts the total cost of financing for real estate investors.

Intermediate16-17 min

Interest Rate

An interest rate is the percentage charged by a lender for the use of borrowed money, typically expressed as an annual percentage of the principal amount.

Beginner15-18 min

Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, leading to a decrease in the purchasing power of currency over time.

Intermediate14-15 min

Quantitative Tightening

Quantitative Tightening (QT) is a monetary policy where a central bank reduces its balance sheet by allowing maturing assets to expire without reinvestment, thereby decreasing the money supply and tightening financial conditions to combat inflation.

Advanced12-15 min

Federal Open Market Committee (FOMC)

The Federal Open Market Committee (FOMC) is the monetary policy-making body of the U.S. Federal Reserve, responsible for setting interest rates and influencing the money supply to achieve maximum employment and price stability.

Intermediate13-14 min

Quantitative Easing

Quantitative Easing (QE) is a monetary policy where a central bank buys government bonds and other financial assets to inject money into the economy, lower long-term interest rates, and stimulate economic activity during downturns.

Intermediate11-12 min

Refinancing

Refinancing is the process of replacing an existing mortgage or loan with a new one, often to secure better terms, lower interest rates, or access built-up property equity.

Intermediate15-18 min

Yield Curve

The yield curve is a graphical representation of the yields of bonds with equal credit quality but differing maturity dates, providing critical insights into market expectations for future interest rates and economic growth, which are vital for real estate investment decisions.

Advanced10-15 min