30 year loan interest rates

30 year fixed hit 6.875% yesterday.
There have been a lot of questions as to why interest rates are going up. I hope this explains it a little bit.

The public perceives rates are going down because the Fed lowered the overnight rate .50 last week, which caused the Prime Rate to drop.
That is what got all the press.
What the public does not realize is that the Fed Rates are for overnight borrowing and only really lower Prime, which if you have an equity line, it is great But it doesn’t mean anything for 1st mortgages.
As for what the news media reports for the 30 year fixed, it is often the average rate for the previous week. Rates spiked later last week, so that was not in the figures that have been reported.
What the public also does not understand is the Fed started the auctioning of bonds, i.e. borrowing, last week to cover all of these bailouts, stimulus packages etc. The auctions did not go well. Entities buying them did not bid them well, because they know that there will be so much government borrowing going forward they want higher rates from the government in order to step up and buy the bonds.
Bottom line, we are now in a period where there is a huge demand for borrowings from the US Govt, but not that much money to invest by entities that buy bonds. Simple supply and demand, if you are selling an interest rate and no one wants it, you lower the price, which causes the rate to go up.