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Thursday, August 16, 2007

30 Year Mortgage Rates and Ten Year Treasury Yield

by Calculated Risk on 8/16/2007 06:51:00 PM

Freddie Mac reports that mortgages rates were up slightly during the last week:

Freddie Mac today [said] the 30-year fixed-rate mortgage (FRM) averaged 6.62 percent with an average 0.4 point for the week ending August 16, 2007, up from last week when it averaged 6.59. Last year at this time, the 30-year FRM averaged 6.52 percent.
30 Year Fixed Rate Mortgage vs. Ten Year Yield Click on graph for larger image.

Here is a scatter graph showing the 30 year fixed rate mortgage (Freddie Mac average monthly rate) vs. the monthly Ten Year treasury yield for every month since Jan 1987 (last 20 years).

The grey blocks are pre-2001 (before the Fed started aggressively cutting rates). The light blue blocks are after Jan 2001. The Red block is this week.

It appears 30 year rates for prime conforming fixed-rate mortgages are still within the normal range when compared to 10 year treasury yields. The graph might tell a very different story for jumbo prime loans, or non-prime loans, but I don't have the data for jumbos.

Note: This shows rates are still low compared to the last 20 years. Rates were even higher in the late '70s and early '80s. Mortgage rates in '50s and '60s were on the low end of the scale, but Freddie Mac doesn't provide any data for those periods.