The benchmark 10-year Treasury as of late Tuesday afternoon has inched down again to a new low for the year between 2.75% and 2.80%, pressuring mortgage rates downward.
Chief U.S. financial economist Brian Bethune at IHS Global Insight told NMN rates had already been dropping in anticipation of the Fed's decision to reinvest principal payments from in agency mortgage-backed securities and debt into longer-term Treasury securities. At the time of this writing it looked like the 30-year mortgage rate could drop another five to 10 basis points more beyond its recent average around 4.50% in reaction to the Fed's decision to follow through with that plan.
The low rates may not be sustained, "but there's a nice window here," said the economist.
When asked about how much of an effect this will have given the tight underwriting that has been constraining mortgage market activity, he confirmed it could cause "hiccups in having these rates feed through."
Still, he said, "it's important to have as much easing out there as possible" given the fragile state of the economy.
