Quora Answer: Why are Bonds & Mortgage Rates Intertwined?

The following is my answer to a Quora question: “Why are bonds and mortgage rates intertwined?”

Both of them are debt instruments, the same class of assets, and both tend to attract the same category of investors.  When the market is turbulent, investors move for debt instruments, and this creates a demand for them.  And when the market is expanding, they lower their exposure to debt instruments in favour of equity.  Another reason is also because mortgages are consolidated, rated, packaged, and resold as bonds to investors.  In this sense, the mortgages are themselves bonds.