Daily Mortgage Rates Moving Higher As Treasury Yields Increase
Posted on | October 12, 2009 | 1 Comment
Daily mortgage rates have increased over the last few days as predicted on Subprime Blogger. The conventional 30 year fixed rate mortgage has been around 5% to start this week and it could go higher. The 10 year treasury rate yield has hit its 200 day moving average and bounced which has helped to push mortgage rates higher. This coupled with the Federal Reserve Bank concluding its purchases of US Treasuries by the end of the month was a recipe for higher mortgage rates.
There is no irony in the fact that the 10 year treasury rate yield hit its 200 day moving average just days after the Fed announced they were going to stop buying treasuries. These two events could be the reason that we have put a bottom in for mortgage rates. Several analysts have predicted that we are going to see all time lows in mortgage rates again this Fall or Winter but that is unlikely.
The 10 year treasury rate yield and the 30 year fixed rate mortgage have had a very strong correlation since 1971. As much as things change they always seem to stay the same. Any time we see a strong move up in the 10 year yield mortgage rates soon follow. It has not been as strong of a correlation in 2009 because the Federal Reserve Bank has been buying mortgage backed securities but the correlation is still there.
When the Fed stops buying mortgage backed securities, March 2010, and concludes the purchases of US Treasuries, October 31st, 2009, then we are going to be in for a roller coaster ride when it comes to mortgage rates. These two hands in the pot for the Fed has greatly helped create artificially low mortgage rates. These low mortgage rates have assisted the housing market but it could backfire in the future when these two hands come out of the pot.
With that being said now is one of the best times in recent history to refinance. Several mortgage lenders are still advertising mortgage rates under 5% and if you have a good credit score you might be able to lock in at these low rates. If you wait a few months or even a few weeks, you might find that mortgage rates are closer to 6% than 5%.
Please make sure to return to Subprime Blogger for all your mortgage and financial news. To stay up to date on the current state of finances make sure to bookmark the current news category below. We offer information on everything from getting a lower mortgage rate to increasing your credit score.
Author: Jeremy North
Comments
One Response to “Daily Mortgage Rates Moving Higher As Treasury Yields Increase”
Leave a Reply
October 13th, 2009 @ 12:11 am
[...] Subscribe to the comments for this post? [...]