Where are Mortgage Rates Headed?

Does anyone have any idea what is happening with mortgage interest rates?  While I don’t pretend to know where rates are headed and I always recommend a borrower lock in their rate when they are comfortable with the resulting mortgage payment and lock period, I do like to present information that helps real estate agents and borrowers make good decisions.

Let’s start with some history.  The chart below shows the average 30 year fixed rate on a conventional conforming mortgage since Freddie Mac started tracking rates in 1972.  2014 shows the YTD average.

30 Year Fixed Rate Mortgages Yearly Avg History - 02 13 14As you can see, mortgage rates started moving back up from the historic lows of 2012 and early 2013.  The current average 30 year fixed rate for the past weekly survey was 4.28% with 0.70% in discount points.

You can also see that we are still in the midst of a long term downward trend in mortgage rates since they peaked in the early 80’s.

Movement in the 10 year US Treasury yield is thought to be one of the best “proxy” tools for the direction of mortgage rates in the short-term.  The current 10 year Treasury yield is about 2.75% with an expected move about 3% by year end.  Most mortgage forecasters indicate that they expect mortgage rates to hit 5% by the end of 2014, but I wanted to share a forecast from a market technician who believes the 10 year Treasury yield will fall to 2.25% in the next 6 months.  Here is his post:  10 Year Yields to hit 2.25%

He ends his post with – “The techs are calling for a 2.25% 10-year yield. Remember that.” 


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