Bank of America Refinance Mortgage Rates – Yields Push Mortgage Rates Up
Posted on | October 28, 2009 | No Comments
Bank of America refinance mortgage rates have been at or below 5% for almost two full months now. When treasury yields were heading lower mortgage interest rates worked their way all the way back down to the psychological level of 5%. Now the 10 year treasury rate has hit a level of support and has moved higher since the beginning of October.
The 10 year treasury rate yield and the 30 year fixed rate mortgage have had a very strong correlation since 1971 when mortgage rate data was first collected. There has been a little bit of a separation in 2009 as the Federal Reserve Bank has purchased mortgage backed securities and US Treasuries to force mortgage rates lower but overall the correlation remains.
If the 10 year yield continues to work its way higher towards the summer highs of 4% then there is a good chance we could see Bank of America mortgage rates back up towards 5.5%. This summer we saw the 2009 high for the 30 year fixed mortgage rate at 5.59%. This is when the 10 year yield was up trending and well above its 50 day moving average.
Just recently we have seen the 10 year yield break through the 50 dma and move much higher. There is still a chance that the yield could fall below the 50 dma again but it is likely that the 200 dma will serve as support as it did in early October. If you prefer for mortgage rates to be low then you should hope that treasury yields start to drop.
The problem that we currently have is that the Federal Reserve Bank is going to stop buying US Treasuries which is going to make it very difficult for treasury yields to drop. In fact, treasury yields are likely to increase to make US Treasuries a worthwhile investment to foreign investors. If these investors are getting a return of 3.4% on a 10 year treasury note this is not likely to be seen as a great return of investment.
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Author: Alan Lake
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