Random thoughts about home loan
These lenders could grant only as many mortgage loans as equalled the total funds they had on deposit, so they started selling the loans to larger investors in the form of bonds, which in turn generated more money for more mortgage loans. This new money came from individuals or agencies interested in investing in mortgages. Naturally, these individuals and agencies look for a high yield on their investments. Mortgage rates are determined by investor demand which, in turn, is determined by investment performance. Loan portfolio worth is negatively affected by poorly performing loans, which eventually trickles down to the investor.