Over the last few decades, the 30-yr fixed mortgage rate has run at 1.75% over the 10-yr yield – which if true today, it would put us at 5.0%, instead of 6.0%. Here’s what the MND thinks about the bond yields:
As for Treasuries, yields are now high enough as to be pricing in virtually all of the expected Fed rate hikes over the next year. Once that happens, the only way for them to go much higher is for the data to deteriorate further. Bottom line: if we can avoid upside inflation surprises like last Friday’s, we may have just seen the highest rates of the year.
If the bond yields settle down (the 10-year was 3.48% on Monday), and bring in more MBS buyers, then maybe the mortgage companies can give up the extra 1% spread they are sitting on today. Our chances of survival will be much more likely with 5% mortgage rates, then 6%!
Read full article here:
MND Article
Don’t you just love how our leaders just wing it:
San Diego Realtors Association President-elect Frank Powell said he has been trying to sell a home in Bay Park for two months.
The home is in a prime location with an amazing view. Not too long ago this home would be gone within five days.
“More people are trying to get in the market but still can’t afford it, and eventually the houses will go down because the interest rates are increasing,” said Powell.
“They may not be ready now but you may be able to afford it in five years,” said Powell.
Powell says he doesn’t expect a significant drop in prices since inventory is still low and many people are still coming to San Diego from out of state.
Another expert here:
https://fox5sandiego.com/news/local-news/more-inventory-reduced-home-prices-point-to-a-shift-in-real-estate-market/
> 1.75% over the 10-yr yield – which if true today, it would put us at 5.0%, instead of 6.0%. “
The Fed has strongly signaled at least 50bps and likely 75bps in July with more to come. The buyers of MBS know this and need more margin.
Call me crazy but 7% seems more likely than 5%.
We might hit 7% next month, but hoping it retraces quickly to 5%. At least by 1Q23!