Treasury Yield Creeping Up Along with Refinance Mortgage Rates

In the span of a few short weeks, the yield on the 10-Year treasury has bolted up by more than one-half of a percentage point. That is a major move in treasuries and confirms the current investor mood is getting a bit comfier at the year’s end.

Whether investor sentiment moving away from long term bonds in favor of riskier and higher yielding investments is smart here is not our call, we can only work with what is given. Of course we know that as the 10-Year treasury yield goes up, so does refinance mortgage rates. So, with the recent investor movement out of 10-Year bonds and into the equities market, mortgage rates have bounced up off historic lows by almost one-half percent, roughly the same amount as the rise in the 10-Year Treasury Yield.

Fortunately for those still considering a home refinance, mortgage rates are still in good shape with the current par or “even” rate on the 30-year fixed home loan standing near 5.25 percent.

The big test for further and significant increases to mortgage refinance rates will be the 4.0 percent level on the 10-year treasury. Back in June of this year, we almost breached the 4.0 percent level, but there was strong resistance at that mark. The 10-year ultimately fell back to levels near 3.2 percent in November.

Just as with stocks, major resistance levels, once breached, can lead to a major move upward. The10-year treasury 4.0 percent mark is the major resistance level to pay attention to as far as refinance mortgage rates are concerned. A solid close above this level could be a bad sign for mortgage rates, at least in the short-term.

I know that there are many people that held out when rates recently hit historic lows, but refinance rates are still in great shape for those considering a lock. Yes, they have bounced off their lows, but the risk that interest rates will rise significantly higher still outweighs the risk that they will fall like a rock at current levels.

In housing, the S&P composite index of home prices in 20 metropolitan areas was flat in October, falling short of expectations for a rise of 0.2 percent according to a Reuters survey. September's index was revised upward to a gain of 0.4 percent, from a previously reported 0.3 percent.

Some would leave you to believe that the housing market has now stabilized, but that assessment may be preliminary. A continued rise in home defaults along with a huge crop of foreclosures waiting to hit the listing market could produce another wave of falling home prices. Continued low mortgage rates along with improvement in consumer confidence and employment could help to curtail further home price drops. We’ll just have to wait and see where the ball bounces from here.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

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