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Mortgage Rates and Bond Yields Surge Higher, Fed Tries to Stop the Trend

Over the past two months, mortgage rates and long term bond yields have surged higher due to to fears the Fed will begin to wrap up the current round of quantitative easing (QE3) as early as this September. Mortgage rates today on 30 year conforming loans are averaging 4.52, up over 1.00 percent from the beginning of May when the average rate was 3.43 percent. 10 year Treasury yields are also up around 1.00 percent over the past couple of months. Yields have risen from 1.66 percent in early May to 2.60 percent yesterday.

To stop the surge higher, several Fed officials including the Fed Chairman, Ben Bernanke, have said the Fed might possibly keep the Fed funds rate lower longer than previously thought. The Fed has also stated the possibility of keeping QE3 going for another year instead of ending it in a couple of months.

Mortgage Rates and Bond Yields Surge Higher Fed Tries to Stop the TrendThe talk is having some impact on lower bond yields and mortgage rates will move lower next week as well. The recent high in 10 year Treasury yields is at 2.73 percent on July, 5. Current 10 year yields are sharply down today, averaging 2.53 percent - down 15  basis points.

Today's mortgage rates on 30 year conforming loans are at 4.52 percent but will fall below 4.50 percent by Monday. 30 year rates will probably fall to the 4.35 percent to 4.40 percent range by the middle of next week. Currently, on our rate table in the state of California we have lenders quoting 30 year conforming rates as low as 4.00 percent. The same lenders are also quoting mortgage rates as low as 4.00 percent with points in other states.

Average 15 year conventional mortgage rates are at 3.52 percent, up from the prior week's average rate of 3.45 percent. This coming wee,k average 15 year rates will head back down to a range of 3.35 percent to 3.40 percent. Right now in our rate database you can find lenders quoting rates in Florida as low as 3.00 percent with points.

Average jumbo mortgage rates on 30 year loan surged above 5.00 percent this week to 5.15 percent, an increase from last week's average rate of 3.45 percent. Two  months ago the average 30 year jumbo mortgage rate was much lower at 3.94 percent. This week average 30 year jumbo rates will fall back below 5.00 percent. On our jumbo rate table in the state of New York we have several lenders quoting 30 year jumbo mortgage rates as low as 4.50 percent with points.

15 year jumbo mortgage interest rates are averaging 4.62 percent, up from the previous week's average 15 year jumbo rate of 4.39 percent. This week average 15 year rates will fall to a range of 4.40 percent to 4.45 percent. The lowest quoted 15 year jumbo rates in our database for several different states are around 3.625 percent to 3.75 percent.

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Author: Brian McKay
July 15th, 2013