Government bond market fluctuations have renewed concerns about rising mortgage rates and may prompt borrowers to take more notice of what mortgage lenders are charging on a local level.
The yield on the 10-year Treasury bond — which serves as the benchmark for mortgage interest rates — is nearing 3% for the first time since December 2013, amid ongoing concerns about inflation and large-scale auctions of short-term Treasury notes this week that’s adding a glut of supply for government debt. The recent bond market volatility already prompted Fannie Mae to revise its outlook for mortgage rates, while housing experts are also concerned about how recent tax reform legislation will affect home prices.
“Typically when the 10-year Treasury moves around a lot, you’ll see mortgage rates follow,” said Leonard Kiefer, deputy chief economist at Freddie Mac.
“The rate [consumers] are likely to get on a mortgage is going to tie very closely to what happens with the 10-year,” he added. “It’s not exactly one-for-one, but if you look historically week-to-week, the correlation is super high, so an increase in the 10-year yield is going to mean higher mortgage rates in all likelihood.”
But Tuesday’s bond market activity didn’t immediately produce significant swings in mortgage rates.
“Today was fairly uneventful,” in terms of pricing, said Andrew Weinberg, the principal at Great Neck, N.Y.-based mortgage broker Silver Fin Capital. Even a lender Weinberg works with that normally reprices quickly on sharp market movements only repriced once on Tuesday.
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