Black Gold and Mortgage Rates
Seems that the surging price of oil is impacting all segments of the economy, including mortgage rates. Inflation fears have taken center stage as the weak dollar and surging prices for oil, corn and other commodities have clearly spooked bond investors.
Yields are up sharply over the past few weeks, with the 10-Year Treasury touching 4.27% on Monday, up from 4% just a few weeks ago. The yield on the 2-Year Treasury is now hovering around 3%, up from around 2.75% not long ago.
Since long term mortgage rates are based on the 10-Year treasury yield, inflation is a key component to be aware of. Why own a 10-year bond at 4.2% when the inflation rate is somewhere near 4%
Does this mean that bond yields and mortgage rates will continue to rise with increasing inflation numbers? Maybe not. Investors may flock back to Treasurys if there is more turmoil in the stock market, the proverbial flight to quality, even though inflation is eating away at bond returns. If the choice is a 4% bond yield versus losing 10% in the stock market, a lot of investors will take the 4%.
The remainder of this week is relatively light for economic reports, so expect an even keel on mortgage rates. Next week, however, is a different story, so stay tuned for "all that is great about a mortgage rate"... I know, I can see you rolling your eyes!
May the Mortgage Rates be with You!
Refinance Tool Box
Yields are up sharply over the past few weeks, with the 10-Year Treasury touching 4.27% on Monday, up from 4% just a few weeks ago. The yield on the 2-Year Treasury is now hovering around 3%, up from around 2.75% not long ago.
Since long term mortgage rates are based on the 10-Year treasury yield, inflation is a key component to be aware of. Why own a 10-year bond at 4.2% when the inflation rate is somewhere near 4%
Does this mean that bond yields and mortgage rates will continue to rise with increasing inflation numbers? Maybe not. Investors may flock back to Treasurys if there is more turmoil in the stock market, the proverbial flight to quality, even though inflation is eating away at bond returns. If the choice is a 4% bond yield versus losing 10% in the stock market, a lot of investors will take the 4%.
The remainder of this week is relatively light for economic reports, so expect an even keel on mortgage rates. Next week, however, is a different story, so stay tuned for "all that is great about a mortgage rate"... I know, I can see you rolling your eyes!
May the Mortgage Rates be with You!
Refinance Tool Box
posted by Jim Bisnett at
1:02 PM
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