Mortgage Rate Predictions – Interest Rates Lower But Not For Long
Posted: July 15th, 2009 | Author: admin | Filed under: 10 year treasury rate, Mortgage Rate Predictions | 2 Comments »In this weeks earlier addition of mortgage rate predictions on Subprime Blogger I predicted mortgage rates to be at 5.05%. My predictions are based on the Freddie Mac weekly mortgage survey so I cannot take too much credit, but…from CNBC.com:
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.05 percent, down 0.29 percentage point from the previous week, the lowest since the week ended May 22, but higher than the all-time low of 4.61 percent set in the week ended March 27.
As stated, my predictions are for the Freddie Mac data which will be released later on Thursday, but as projected mortgage rates did come down a bit. With this being said, there looks like bad news on the horizon. The uptrend in the 10 year treasury rate remains intact with a strong 4.5% gain on the yield of the 10 year on July 15th. The 10 year treasury rate is now well above the 50 day moving average and could work its way back to 4% on the yield.
If the 10 year yield works its way back to 4% we are likely to see the 30 year fixed mortgage rate push towards 6% very soon. The Federal Reserve has worked very hard in an attempt to keep mortgage rates low, but they may have run out of bullets. Maybe the market is actually setting interest rates after the BILLIONS of dollars that have been printed. It will be very interesting to see where the 10 year yield goes from here as it has totally baffled me as of late. Any of you with thoughts, I encourage you to please comment and clear this up…
It looks to me as though the yield moved up when the stock market started moving up. This same type of movement occurred in April of this year. I think this was caused by two things: Financials posted huge gains last quarter and Consumer prices rose which smelled like inflation. Gas prices rose last month at an extremely high rate which the market did not support. I think gas proces will drop in the coming months and subsequently consumer prices will drop or remain steady. I also think the gains that the market saw in financials are false and will not sustain through the end of the year. You have to take in context the new “mark to market” regulations which let these banks falsely report bad assets which are still on their books and unresolved. I look for mortgage rates to drop again by September. Look for the stock market to start moving sideways and you will see people more willing to retreat to the safety of treasuries. Of course this all falls apart if inflation does start to set in.
[...] Freddie Mac mortgage rates weekly survey showed mortgage rates lower. Subprime Blogger does a weekly prediction of these mortgage rates and once again was very accurate. From Subprime Blogger: In this weeks earlier addition of [...]