1 Homeowners take out fixed-rate mortgages that include the option to repay early.2 Lenders package mortgages into securities and resell them. Mortgage-backed securities are now nearly 40% of the bond market.3 Financial institutions buy them for the long streams of homeowners' payments. If homeowners refinance, those payment streams dwindle.4 Interest rates fall, and homeowners refinance.5 Institutions rush to replenish the stream of payments by buying 10-year Treasury bonds.6 The Treasury buying pushes up bond prices, simultaneously depressing interest rates.7 Lower interest rates stimulate more mortgage refinancing, and the cycle continues.