Mortgage Rates on the Rise?

posted on December 10th, 2009 filed under: Real Estate News

The yield on the 10-year Treasury note has risen from below 3.2% in early October to about 3.5% now.  That may not seem significant, but it is.

Why do we care?  The rates on 30-year fixed mortgages are most closely associated with the yield on the 10-year note (because that’s the duration that most closely correlates with the period of time that people actually carry mortgages before moving or refinancing).

Despite the rise in the 10-year yield since October, the nationwide average for 30-year fixed-rate mortgages hit a record low 4.71% a week ago.  But that may not last.  The spread between the two can vary, but averages 1.7%.  If the spread gets compressed, something will give sooner or later.  Rates have risen ten basis points (100ths of a percent) to 4.81% in the past week.

Bottom line: Be aware of the yield on the 10-year note.  The more it rises, the more upward pressure there will be on fixed-rate mortgages.

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posted by // This entry was posted on Thursday, December 10th, 2009 at 9:59 pm and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.

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