This is a YouTube video titled "💡 Federal Funds Rate vs Mortgage Rates 💡" containing an explanation by Andrew Huberman about the relationship between the federal funds rate and mortgage rates, clarifying how they are related but not directly correlated due to differences in lending terms and market factors. The content was created in July 2021.
I wanted to help explain the correlation between the federal funds rate and mortgage rates. Now let's say you walk into a bank and try to withdraw a large sum of your cash. The banks don't always have it on hand, as we all know now, so they have to live bank to bank. That's the federal funds rate, that lending rate amongst banks. Mortgage rates obviously are a longer term thing. The average, even a 30 year mortgage, the average mortgage is held for about 5 to 10 years, so that works off of more than 10 year treasury yield in the bond market. So although they somewhat fall in line, they're not directly correlated. That's very important to know. While the Fed's making a waddle.
