Economic Conversation

We currently find the 10 year treasury rate at the bottom of an upward trend channel.  Not only is it at the bottom of the trend channel, it is also extremely close to the 50 day moving average would should serve as support also.  Unless the government does something to send the 10 year lower, it looks as if the selloff will end in the next few weeks.  If supoort does how, look for the 10 year treasury rate to work its way back up to 4% which would mean mortgage rates would move higher towards 6%.

While this is highly likely to happen there is also a scenario in which the government would sink more money into mortgage backed securities and auction off a ton of treasury bonds which would send the 10 year treasury rate sinking through its 50 day moving average.  It would not surprise me at all if we saw an announcement in the next few days about this exact situation.  Ben Bernanke and Timothy Geithner are working extremely hard to hold average mortgage rates down so this would not be out of the question.

AUTHOR: Patty Cramer

Mortgage rate predictions were extremely easy to make from October of 2008 until just two weeks ago; in more words or less, mortgage rates were going down, down and down some more.  There were some weeks where rates saw a slight bounce of .05% or so but nothing compared to have happened last week.  Mortgage rates saw a jump of almost 50 basis points as rates went form 4.91% to 5.29%.  This is very bad news for current and future home owners.

Many would say that it will lower home prices because mortgage rates are going higher but aren’t home prices extremely low already?  Now that you know mortgage rates are going higher, possibly much higher, are you going to give up on refinancing?  If you were in the market to buy a new home, has this changed your mind?