Mortgage Rates and Treasury Yields

SOURCE www.axios.com
Mortgage rates could continue to drop even if Treasury yields remain stable, as they are currently significantly higher than historic levels. Banks have reduced their presence in the mortgage market, leading to less competition on rates.

Key Points

  • Mortgage rates are more than 2.6 percentage points higher than the 10-year Treasury yield
  • Banks have reduced their presence in the mortgage market
  • Mortgage spreads unlikely to remain high indefinitely

Pros

  • Potential for further drop in mortgage rates
  • Historically high spread between mortgage rates and Treasury yields

Cons

  • Banks retreating from the mortgage business
  • Less competition on rates