Interest Rate Forecast Projects Volatile Mortgage Rates
Posted on | June 12, 2009 | 23 Comments
The interest rate forecast is very clouded right now as there has been great volatility in the treasury market and well as the mortgage market. The 10 year treasury rate has shot from 2% to almost 4% over the last five months. Since almost hitting 4% we have seen heavy selling at the rate has fallen back to under 3.8%. This would suggest that we will see a little bit of stablization or a pull back in mortgage rates next week but who really knows with this market.
It is usually the case that mortgage rates and the 10 year treasury rate trade side by side in a strong correlation. Well, that was not the case for the first five months of 2009. During the strong move higher in the treasury rate, mortgage rates were hitting new lows each week. This changed quickly in June as mortgage rates have gone from 4.8% to 5.59% in a matter of a few weeks. Now that the 10 year treasury rate has hit the 4% resistence level, it would seem that interest rates are going to stabilize and could fall as the 10 year falls.
The problem is the disconnect with interest rates and the 10 year rate. The reason for this is the government’s interaction with interest and mortgage rates. Ben Bernanke has printed as much money as he possibly can to keep mortgage rates low, but no matter how hard he tries, free markets are eventually going to set rates. An interest rate forecast projects volatile mortgage rates because the government is fighting the idea of free market capitalism.
Make sure to stay up to date on the housing and mortgage market with the mortgage rates forecast I provide.
Tags: 10 year treasury rate > interest rate forecast > volatile mortgage rates
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June 12th, 2009 @ 12:13 pm
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