10-Yr Treasury Dives: Mortgage Rate Drop & Refinance Boom are just around the corner

[AJ Wong]

US 10 year Treasury yields tumbled (by nearly 10 basis points today and counting..) with the latest inflation metrics showing a dip last month indicating the Federal Reserve could start to lower interest rates this year with a now 80% chance of a September rate cut. 

Mortgage rates are related to the US Treasury yield and any meaningful rate cut could bring mortgage rates average 30 year fixed mortgage rates into the 6%'s. The MBA anticipates rates into the 5%'s towards the latter part of 2025. 

This could cause real estate inventories to rise as more sellers consider moving on from their pandemic rate mortgages for more lateral and feasible borrowing costs. Borrowers that purchased during the last 24 months, particularly with alternative mortgages such as DSCR loans at elevated rates could see worthwhile refinancing scenarios in the very near term just as any early payoff penalties are expiring.

Additionally, the costs of fixed rate seconds and HELOC's could come down from the double digits or make cash out refinances more feasible to tap equity for those with low first rate mortgage loans.

On the purchase side, the elections is that any meaningful move in mortgage rates could increase buyer demand. 

At what mortgage rate does investment get more enticing?