Mortgage rates jump in tandem with rise in Treasury yields
Mortgage rates, whose movements until now had not reflected gains in the benchmark 10-year Treasury yield, rose 14 basis points this week, according to Freddie Mac.
Furthermore, rates are expected to continue increasing, albeit at a restrained pace for this year
Still, “they will remain inarguably low, supporting homebuyer demand and leading to continued refinance activity,” Sam Khater, Freddie Mac’s chief economist, said in a press release. “Borrowers are smart to take advantage of these low rates now and will certainly benefit as a result.”
While the 10-year Treasury yield on Jan. 13 was nearly 5 basis points higher than it was seven days prior at 1.088%, the difference between its high and low points for the week was 18 basis points.
The increase in mortgage rates are “a long-awaited deviation from the glacial, downward trend that rates have followed for the past few months,” Zillow Economist Matthew Speakman said in his commentary on that company’s rate tracker, adding that they were at their highest level since mid-November at one point.
Any further rise remains tied — as it has for the past few weeks — to the country’s ability to contain and treat COVID-19, along with any improvement in the labor market.
"A lack of meaningful progress on those fronts limits how much higher rates can head. While there is more upward pressure on mortgage rates now, rates still remain historically low, and a prolonged upward spike is far from inevitable," Speakman said.
The 30-year fixed-rate mortgage averaged 2.79% for the week ending Jan. 14, up from last week when it averaged 2.65%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.65%.
The 15-year fixed-rate mortgage averaged 2.23%, up from last week when it averaged 2.16%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.09%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.12% with an average 0.4 point, up from last week when it averaged 2.75%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.39%.