Wednesday, August 08, 2018

Mortgage Rates and Ten Year Yield

by Bill McBride on 8/08/2018 02:10:00 PM

With the ten year yield getting close to 3%, there has been some discussion about whether mortgage rates would hit 5% soon. Based on an historical relationship, 30-year rates should currently be around 4.7%.

As of yesterday, Mortgage News Daily reported: Mortgage Rates Mostly Steady Today

Mortgage rates were roughly unchanged today. That would make this the 4th day in a row without any move higher in rates, and it would leave us at the lowest levels in roughly 2 weeks. [30YR FIXED - 4.625% - 4.75%]
emphasis added
The graph shows the relationship between the monthly 10 year Treasury Yield and 30 year mortgage rates from the Freddie Mac survey.

Mortgage rates and 10 year Treasury YieldCurrently the 10 year Treasury yield is just under 3%, and 30 year mortgage rates were at 4.60% according to the Freddie Mac survey last week.

To reach 5% (on the Freddie Mac survey), based on the historical relationship, the Ten Year yield would have to increase to about 3.3%.