Watching the 10-year go up, up, up…

We're about to test the two theorems of rising mortgage rates. One concept says that when rates rise (as rapidly as they have since early December) that new applications dry up — and fast. The other theory (the one promoted by optimists) is that rising rates spur home buyers sitting on the fence to apply because they fear that rates will rise even more and want to lock in now. We shall see. But early this morning the yield on the benchmark 10-year was at 3.67%. As one mortgage broker told me early Monday: "Volume is off big numbers." At the beginning of December the 10-year was at 3%. It was believed that the Federal Reserve (under its quantitative easing initiative) would be out there buying MBS, and driving down mortgage rates. But whatever the Fed is doing in the secondary mortgage market doesn't appear to be working, at least, as it applies to rates…