Mortgage Rates Up Huge Due to 10 Year Treasury Rate Yield Rally

Posted on | December 29, 2009 | No Comments

Mortgage interest rates are up huge this morning due to the rally that the 10 year treasury rate yield has seen since December 1st, 2009.  At the beginning of December, the 10 year yield was below its 50 and 200 day moving averages and there was a possibility of a break down towards new lows.  At that point the 10 year yield double bottomed at 3.2% when the 30 year fixed mortgage rate hit an all time low of 4.49%.  Many analysts were thinking that mortgage rates could end up at all time lows to start 2010.


Instead of sitting at all time lows there is a good possibility that mortgage rates could be above 5.5% to start 2010.  Since December 1st, the 10 year yield has pushed much higher to 3.8%.  A Morgan Stanley chief economist recently made a prediction that the 10 year yield would increase another 40% and reach 5.5% in 2010.  If this is the case, he feels that mortgage interest rates will reach at least 7.5%.

If the 30 year fixed rate does move this much higher it will be very interesting to see how it affects the housing market.  Many home owners will swarm to mortgage lenders trying to get the last little run of mortgage rates but after a certain level, 6%?, we are likely to see those who are refinancing or buying a new home give up on the idea of getting a low mortgage interest rate.  Only those who are “truly” in the market for a new home will likely get a mortgage with rates moving this high this quickly.

Author: Jesse Wojdylo

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