Refinance Home Loan Rates – Mortgage Rates Poised to Move?
Posted on | October 26, 2009 | No Comments
Refinance home loan rates have been at or around 5% for quite some time. Mortgage interest rates could very well be poised to make a big move in November but which way will that move be? The Federal Reserve is going to stop buying US Treasuries in November so that would point towards higher mortgage rates. Just when we think that to be the case President Obama announces a new mortgage plan.
The new Obama mortgage plan is designed to help low to middle income families buy or rent a home. To do this, the Obama administration is going to continue to work very hard to keep mortgage interest rates low. It is still up in the air as to how they are going to do this but I am sure it is going to involve printing money in some form or fashion.
The 10 year treasury rate yield has been in an up trend since the Fed announced they are going to stop buying US Treasuries at the end of October. One would think that this would cause higher mortgage rates but that has yet to be the case. Since the up trend started in the beginning of October mortgage rates have actually moved sideways to down.
There is little doubt that mortgage rates are going to go higher if treasury yields continue to move up. There has been a strong correlation between the 10 year treasury rate yield and the 30 year fixed mortgage rate since 1971 and that has not changed in 2009. The Fed is affecting it a little bit by buying back mortgage backed securities but overall treasury yields move mortgage rates.
With this in mind it will be very interesting to see what mortgage rates do in the next month. It is possible that we have seen the short term bottom and mortgage rates are poised to move higher. Every time we make that claim the government jumps in and pushes mortgage rates back down. I guess all we can do is sit back and see what the month brings.
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Author: Alan Lake
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