Refinance Mortgage Rates and the 4.0 Percent Treasury Yield
It has been a great time throughout 2009 and so far through 2010 for refinance mortgage rates, as they have held at or near the lowest levels since they began to be tracked. As we all know, all good things must come to an end, but when will refinance mortgage rates begin to rise once again? Since a major component of the makeup of a refinance mortgage rate is the yield on the 10 year treasury bond, that could be a key indicator as to when home loan rates may begin to rise once again.
Just as with commodities and equities, there are usually key target points to where a big move in either direction can occur. With the 10 year treasury yield, that key target to the upside is the 4.0 percent level. Once the 4.0 percent mark is breached, there could be a major swing to the upside and mortgage refinance rates would be soon to follow. In the past six months, this key level has been approached twice, and both times investors came in to buy bonds and the yield fell back. We are currently getting very near this crucial yield level again, only this time we may not be so lucky.
The multi billion dollar Fed program to buy up treasuries is coming to an end soon and many on the mortgage street are anticipating this will cause bond prices to fall and the yields to rise. Conventional refinance mortgage rates already appear to be drifting upward while fha refinance loans are holding a bit steadier. For those still on the fence waiting to refinance, now would be a good time to lock your rate if it provides a good benefit for you.
