MORTGAGES | How to Know Where Mortgage Rates Are Headed

Dated: February 24 2022

Views: 16

                                                                    interest rate symbol in front of U.S. flag    

We are still in the beginnings of 2022, and mortgage rates continue to increase. But, why is this significant? An increase in mortgage rates impacts your buying power, making purchasing a home more expensive. 

Every Thursday, Freddie Mac releases its Primary Mortgage Survey. On February 2, the survey showed the average fixed-rate mortgage rose from 3.22% to 3.55%. The table below shows how rising interest rates affect buying power:

The Top Indicator if You Want To Know Where Mortgage Rates Are Heading | MyKCM

Understanding the correlation between how the treasury yield moves and how mortgage rates follow matters. Observing the 50-year history of the 10-year treasury yield and following its path shows where mortgage rates will go. The graph below shows that relationship over the past 50 years.

The Top Indicator if You Want To Know Where Mortgage Rates Are Heading | MyKCM

The treasury yield began to climb as we entered the new year, and that has caused rates to increase. On January 27, the treasury yield was 1.74% below the mortgage rate of the same day (3.55%). The average spread between the mortgage rate and treasury yield was 1.74%, close to the average space of 1.7%.

Where Is the Treasury Yield Heading in the Future?

As you can see, a 10-year treasury-yield forecast could be a clue to whether mortgage rates go up or down. 

The Wall Street Journal's survey of a panel of academic, business, financial, and economic experts predict the treasury yield will be as high as 2.84% by December 2024. Sticking with the 50-year history of the treasury yield puts mortgage rates near 4.5% by 2025.

Although the correlation between the 30-year fixed mortgage rate and the 10-year treasury yield is apparent, it shouldn't be used as a precise indicator. They're both hard to forecast, but understanding the relationship between them can help you get an idea of where rates may be heading. Based on our information, it looks like mortgage rates will keep rising for a few years.

If what is presented is correct and you've considered your financial ability, your best bet could be not to postpone buying a home.

Blog author image

Wendy Stewart - Allison James Estates & Homes

As a native of Washington DC, Wendy brings extensive knowledge of the area. She consistently shows the aptness to satisfy clients who buy a house or sell a home in the cities of Washington DC, Bowie, ....

Latest Blog Posts

SELLERS | The Role Access Plays in Getting Your House SOLD

So you've decided to sell your house. You've hired a real estate professional to help you with the entire process, and they have asked you what level of access you want to provide to potential.

Read More

SELLERS | Want an Easy Way to Get Top Dollar for Your House? List It!

You usually want to sell anything for the most significant profit possible when selling it. That happens when there's a strong demand and a limited supply for that item. In the real estate market,

Read More

MORTGAGES | How to Know Where Mortgage Rates Are Headed


Read More

SELLERS | When Is the Right Time to Sell [INFOGRAPHIC]

Please don't put it off! Now is an excellent time to list your home. Plenty of buyers are waiting for your house to hit the market.Recent data indicates that home showings are rising. This can

Read More