Mortgage Rates to Rise?

posted on April 2nd, 2010 filed under: Real Estate Market Data, Real Estate News

Fixed-rate mortgages are most closely tied to the yield on the 10-year Treasury note.  The yield has risen sharply of late, and spiked again today after a jobs report that was not even any big surprise.  Unless the yield on the 10-year backs off, expect higher mortgage rates before long.

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In the wake of Wednesday’s expiration of the Federal Reserve’s mortgage-backed securities purchase program (on top of last October’s expiration of the Fed’s Treasury purchase program), the prospect of a breakout in 10-year Treasury yields looms large for the real estate market.

Real estate in Miami and Coral Gables is already vulnerable to further declines, as home prices remain elevated relative to incomes.  Higher borrowing costs could help push prices lower unless wages rise even more than is already necessary to support prices.

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Update 04/05/10:  Charts show near-term breakout, albeit within long-term downtrend.

Six-Month Chart (from

Six-Month Chart (from

Historical Chart (from

Historical Chart (from

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