THE MAIN KEY TO UNDERSTANDING THE RISE IN MORTGAGE RATES Every Thursday, Freddie Mac releases the results of their Primary Mortgage Market Survey which reveals the most recent movement in the 30year fixed mortgage rate. It was the first time in three months that the mortgage rate surpassed 3%. In a press release accompanying the survey, Sam Khater, Chief Economist at Freddie Mac, explains: “Mortgage rates rose across all loan types this week as the 10-year U.S. Treasury yield reached its highest point since June.” The reason Khater mentions the 10-year U.S. Treasury yield is because there has been a very strong relationship between the yield and the 30-year mortgage rate over the last five decades. 4 | GRHG | VOLUME TWO | ISSUE TEN | 2021
The graph in Exhibit A on the following page shows that relationship. The relationship has also been consistent throughout 2021 as evidenced by the graph in Exhibit B on the following page. The graph also reveals the most recent jump in mortgage rates was preceded by a jump in the 10-year Treasury rate (called out by the red circles). So, What Impacts the Yield Rate? According to Investopedia: “There are a number of economic factors that impact Treasury yields, such as interest rates, inflation, and economic growth.”
