In The Red – Mortgage Rates Fly Higher Amid High Bond Yields
As uncertainty grows within an expanding economy and high-interest rates, bond yields have surged, reaching highs that haven’t been seen since November. The 10-year treasury yield peeked over 4% this week, with the 2-year treasury yield reaching a new decade high. In the housing market, similar things have come true, as prices for mortgage rates are loosely correlated with bond yields. The price for the 30-year fixed-rate mortgage reached 7.1%, disregarding recent strides seen in the housing sector. Mortgage rates last climbed over 7% in October of last year, reaching highs that hadn’t been seen for 20 years.
The news has drawn more attention to the economic climate, with several experts indicating a chance for the Fed to reinstate aggressive tightening on interest rates. Regardless, mortgage rates have climbed a full percentage point in a little under a month, creating a pressurized environment for homebuyers. Last week, mortgage applications from homebuyers reached a 28-year low, signaling a pause in demand in the housing market. At the start of 2023, analysts saw signs showing a slow but steady recovery from the weakly damaged housing market. Unfortunately, the strides at the beginning of the year have quickly been undone, with new forecasts depicting a rough next several months for home sellers and buyers.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
