Well, mortgage lending rates hit another record low in many markets this past week. This is becoming a weekly occurrence, albeit one in small increments.

We mentioned last week how the Federal Reserve has stiffened its resolve to keep long-term lending rates at record lows at least through this year.

The Fed is accomplishing this task by rolling short-term securities into long-term U.S. Treasury notes and bonds and mortgage-backed securities. The increased demand in these longer-maturity issues increases their price and thus lowers their yield. The Fed is also being helped by our friends in the Mediterranean, namely Greece. People are often perplexed how Greece's fiscal woes impact our lending markets. The short answer is that we operate in a world financial market, not a national one. That means money and capital easily and frequently cross national borders. Many financial institutions – domestic and foreign – own the sovereign debt issued by other countries.

When the risk of owning the debt of a particular country (like Greece) rises, investors sell and often seek haven in less risky securities, like U.S. Treasury securities. As with Fed demand, private investor demand increases prices and lowers yield. Investors have been dumping Greek debt and buying U.S. Treasury debt in recent months, thus helping the Fed to maintain low lending rates.

There is a familiar saying “that's Greek to me,” which means “I don't understand.” In this case, it really is easy to understand Greek, when you understand that today's financial markets are global in nature.

Courtesy of Jessica Regan.

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