When mortgage lenders say "the bond market moved" so the

[JC]

rates are going to go down, what does that mean? Did the bond market go up or down, better or worse that causes the interest rates to go down. Which bond market is it, assuming there is more than one, that causes mortgage rates to go down?

[zanthus]

Interest rate changes CAUSE prices changes in bonds, not the other way around.

If Interest rates are UP, Bond prices down

If interest rates Down, Bond prices UP

There is no Bond market that influences interest rates/mortgage rates.

[Talia M]

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[alcaholicrage]

There are two bond markets in general that affect mortgage rates. The first is US government bonds, which help establish a "credit risk free" yield (or rate).
The second is the mortgage bond market. When you get a mortgage, it is put into a pool of other similar mortgages. That pool is then sliced up and sold as bonds to investors. Those bonds trade in a market of their own.
When you hear someone say "the bond market moved" and rates are going Higher/lower, most likely they are referring to the US govt market rates going up or down.
For the record, there is not a 100% correlation between us govt bond rates and mortgage rates. Credit risk, housing market risk, etc will sometimes make morgage rates move more or less than the change in govt bonds. However, there is a positive correlation in general, which means they will usually move in the same direction, though at varying amounts.

[877YouKeep]

US Treasury notes and mortgage backed securities are typically bought by the same investors. Mortgage back securities are what banks loan on for lending on the housing market. The banks obviously do not hold the mortgages for 30 years they open bids and sell to the secondary market. So banks keep interest rates in pretty close coorelation to the T Notes but a few points higher. Treasury notes have little or no risk, they can afford to offer lower rates. As a result, lower interest rates on T notes are in direct relation to lower rates on mortgages.