Is The Bond Market Affecting Mortgage Rates?

[Kabilan Nathan]

Hello! I'm seeing that mortgage rates have been rising for the past 4 weeks where 30-year mortgages are at around 7% and 15 year-fixed mortgages are at somewhere close to 6.5% now. I've read that this is because of the yields from the 10-year treasuring bonds which have been affected by the interest rates. Does anyone know how true this is and if mortgage rates will keep going up? 

[John O'Leary]

Yes , the 10-year Treasury bond yield can influence interest rates including mortgage rates. It really reflects broader market sentiment and economic conditions. For example, if investors expect higher inflation or economic growth, they may demand higher yields on Treasury bonds, pushing interest rates higher across the board.

[Robin Simon]

Quote from @Kabilan Nathan:

Hello! I'm seeing that mortgage rates have been rising for the past 4 weeks where 30-year mortgages are at around 7% and 15 year-fixed mortgages are at somewhere close to 6.5% now. I've read that this is because of the yields from the 10-year treasuring bonds which have been affected by the interest rates. Does anyone know how true this is and if mortgage rates will keep going up? 

Yes - mortgage rates are greatly influenced by treasury yields and have been moving in conjunction with the terrible bond market of the last couple of months.  100% true.  However, nobody can predict the future if this will continue - hopefully we get some relief soon!

[Kabilan Nathan]

Thank you for the insights, we can only hope it gets better! Very surprising that bonds can have such an effect on mortgages!

[Chris Seveney]

Quote from @Kabilan Nathan:

Thank you for the insights, we can only hope it gets better! Very surprising that bonds can have such an effect on mortgages!

 Bonds have the greatest impact on mortgages due to their longevity (10 year) and mortgages are long term as well. The last auction of treasuries also saw Russia and China buying less US debt and investor optimism is not high, and bids were like 50bps greater. The issue that people keep ignoring is our uncontrolled spending and debt. To lower inflation its a two headed monster and the one everyone is ignoring is spending, and someone needs to buy the debt - and based on how much we are spending its leading to higher rates due to the risk. 

[Jay Hurst]

Quote from @Kabilan Nathan:

Hello! I'm seeing that mortgage rates have been rising for the past 4 weeks where 30-year mortgages are at around 7% and 15 year-fixed mortgages are at somewhere close to 6.5% now. I've read that this is because of the yields from the 10-year treasuring bonds which have been affected by the interest rates. Does anyone know how true this is and if mortgage rates will keep going up? 

The bond market directly dictates mortgage rates in fact for the large majority of mortgages. Mortgage backed securities are bonds made up of 100's of mortgages that are sold to investors all over the world. The prices that these bonds can be sold dictate the mortgage rates for borrowers.  These bonds can be made up of agency (Fannie/Freddie) mortgages or non-qualified mortgage backed securities.  So, not only does the bond market set rates, it directly does for the majority of mortgages. 

https://www.investopedia.com/terms/m/mbs.asp