Every Thursday, Freddie Mac publishes the results of his ‘Primary Mortgage Market’ survey which reveals the latest movement in the 30-year fixed mortgage rate. Last week, the 3.01% rate was announced it was the first time in three months that the mortgage rate exceeded 3%. In a press release accompanying the survey, Sam Khater, Chief Economist at Freddie Mac , explains:
«Mortgage rates rose in all types of loans this week as the performance of the US Treasury 10 – year She reached or its highest point since June.»
The reason Khater mentions the 10-year US Treasury yield is because there has been a strong relationship between the yield and the 30-year mortgage rate over the last five decades.Here is a graph showing that relationship. :
The relationship has also been consistent throughout 2021 as shown by this graph:
The graph also reveals that the most recent increase in mortgage rates was preceded by the increase in the 10-year Treasury rate ( highlighted by the red circles ).
So Qu é affects the rate of return?
According to Investopedia :
«There are a number of economic factors affecting Treasury yields, as rates of inter é s, inflation and economic growth».
Given that there are currently concerns about inflation and economic growth due to the pandemic, the Treasury’s performance soared last week. That increase affected mortgage rates.
what does this mean to you?
Khater, in the press release mentioned above, says:
» We expect mortgage rates to continue to rise modestly, which is likely to have an impact on home prices, causing them to moderate slightly after increasing over the past year .»
Nadia Evangelou, Senior Economist and Director of Forecasting the National Association of Realtors (NAR for its acronym in English é s ), also addressed the issue :
“Consumers should not panic. Note that even though rates increase to n in the coming months, these remain historically low. The National Association of Realtors predicts that fixed mortgage rate to 3 years to reach to 3.5% in mid-2022 «.
In conclusion,
Forecasting mortgage rates is very difficult. As Mark Fleming, Chief Economist at First American, once joked :
«You know, the fallacy of economic forecasting is to never try to predict rates of inter é s and more specifically if an economist in real estate, mortgage rates because invariably it will always be wrong.»
With that said, if you are a first time home buyer or current owner thinking of moving into a home that is better suited to your current needs, stay on top of what is happening with mortgage rates. That can greatly affect your decision.