Mortgage Rates to Stay Below 5% in 2010; Goldman Sachs Says Treasury Yields Remain Low

Posted on | December 29, 2009 | 1 Comment

After Morgan Stanley predicted mortgage rates would rise to 7.5% or 8% in 2010 we hear a Goldman Sachs senior economist predict that mortgage rates will stay below or around 5%.  Edward McKelvey of Goldman Sachs sees the 10 year treasury rate yield around 3.25% in 2010.  A treasury yield at this level would mean mortgage rates would stay around their current levels of 5% or lower.


The reason that McKelvey feels that mortgage rates and yields will remain low is the extremely high unemployment rate.  McKelvey sees unemployment averaging 10.3% in 2010 which will greatly hinder the recovery of the economy.  With this being the case we are likely to see low interest rates for an extended period of time.

These two predictions are on completely different ends of the spectrum when it comes to mortgage rates.  Morgan Stanley feels mortgage rates are going to move all the way up to 8% while Goldman Sachs feels mortgage rates are going to stablize or even drop below the 5% level.  The difference in 5% and 8% on the 30 year fixed mortgage rate is absolutely huge.  Only time will tell who is right when it comes to the 2010 mortgage interest rate prediction.  Stay up to date on this issue through Subprime Blogger.

Author: Jesse Wojdylo

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