What’s driving this rise in mortgage rates? Andrew Krei, co-chief investment officer for Crescent Grove Advisors, said to look at the increase in 10-year Treasury yields since the Federal Reserve began slashing interest rates. Prior to the Fed’s first, 50-basis-point rate cut in September, the 10-year yield was hovering around 3.6%. As of Tuesday, the yield had popped back up to about 4.4%.
“You’ve seen mortgage rates go up kind of in lockstep alongside that,” Krei said. “The bond market is telling you there’s risks out there around growth and inflation: Upside risks in the case of growth would be a good thing, but inflation perhaps a less good thing, and that then filters into the mortgage market.”
Mortgage-backed securities and 10-year Treasury yields tend to move together because they often draw the same investors.
Read the full article here.