How the Chinese Determine Your Monthly Mortgage Payment

Here is an intersting article from about how the Chinese and Japanese governments affect your life…. talk about living in an interconnected world!

Home Buyers Could See Higher Rates If China Cuts U.S. Treasury Purchases

New York — China’s recent signal that it may diversify its foreign investments in 2006 has mortgage industry watchers concerned that if China buys fewer U.S. Treasury securities this year, it may drive interest rates higher and pour more cold water on the real estate market.

Last week, China’s foreign currency regulator said its plans for 2006 include “actively exploring more efficient use of our FX (foreign-exchange) reserve assets” and “widening the foreign exchange reserves investment scope.” While China’s central bank said Tuesday it has no plans to sell dollars from its $800 billion-plus foreign reserves, some analysts predict China may buy less U.S. government debt at Treasury auctions this year.

Like Japan, China is a large buyer of U.S. Treasuries and other U.S. debt such as securities issued by housing agencies Freddie Mac and Fannie Mae. China sees the U.S. debt market as stable and liquid versus other countries’ debt and its purchases have helped keep U.S. interest rates relatively low in recent years.

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