The 30 year fixed mortgage rate has been for quite a ride over the last few weeks. Interest rates have truly been all over the place as the government and the markets are fighting against each other. Every time average mortgage rates get down to around 5% the 10 year treasury rate yield starts to move up as the market starts to set interest rates. Well, this seems to happen until daily mortgage rates get to around 5.5%. The one good thing is that interest rates continue to drop.
When average mortgage rates get to this point, we usually see Ben Bernanke on television making a statement that he is going to do whatever it takes to make sure interest rates remain at historically low levels. At this point mortgage rates react by heading back down again. At 5% we repeat the process. This seems to have been happening for quite some time and interest rate go up and then interest rates drop. Eventually the markets are going to set interest rates and it will be interest to see what happens then.
Looking at 30 year fixed mortgage rates today, we see that they are around 5.1%. This is getting to the lower end of the range so it would not surprise me at all if we see the 10 year treasury rate yield start to move much higher in the near future. The 10 year yield has been uptrending since the beginning of 2009 but it is definitely testing the bottom levels of that uptrend currently. If we see a strong push below 3.45% in the 10 year yield the uptrend might be broken.
