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10 Year Treasury Yield's Influence on Average Mortgage Rates

April 26, 2018

The 10-year Treasury yield jumped above 3% this week and it should push the average 30-year fixed mortgage rates up. A new report revealed that the 30-year fixed mortgage rate could reach 5% much sooner than expected.

 

"There's a lot of competition for not a lot of lending activity. And the industry has learned over the last couple of years that too rapid of a rate increase results in sticker shock and fewer borrowers," said Rick Sharga, executive vice president at Carrington Mortgage Holdings, according to National Mortgage News.

 

Rather than having 2018 end with a 5% interest level for 30-year fixed mortgage rates, the year could end up a bit over the estimate, Sharga continued according to the report.

 

There is no telling how long the 10-year Treasury yield will hold at the 3% mark. Most of the consensus feels that the yield will drop soon enough. Some lenders have already had to alter pricing to push origination fulfillment operations in the right direction, according to the report.

 

"Reduced gain-on-sale is already an issue for mortgage lenders like Flagstar Bancorp and Waterstone Financial, which are reporting margin compression in their first quarter results," according to NMN.

 

To learn more about the effects of the 10-year Treasury yield on average mortgage rates, click on the image above

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