Recently the 10 year treasury rate almost hit 4% which spells doom for low mortgage rates. As the treasury rate increases, mortgage rates will do the same.
Over the last eight months Americans have been spoiled with historically low mortgage rates. Some home owners had the opportunity to refinance close to or under 4.5%. Much of this was due to government interaction. The government, especially Ben Bernanke, did everything he could to force interest rates lower. While overall rates were heading down, the 10 year treasury yield was heading higher.
Anyone who knows anything about the credit market knew that the declining, low mortgage rates would not last. If the 10 year treasury rate was increasing, eventually home loan rates were going to follow. The scary part about it all is the fact that it seemed to all happen at once. Over the course of a three week period, home rates went from 4.8% to over 5.6%. This is an amazing jump for any type of interest rate whatsoever.
What is even scarier is the fact that many of the individuals who thought they were locked in under 5% will find that they are not going to get their mortgage funded because the lenders are seeing higher rates as well. Many of these home owners are going to feel that this is not fair and something should be done about it, but sadly, nothing can be done. If anyone is to blame for this mess it is President Obama and Ben Bernanke.
If they would have let rates been set by the free market system we would not be seeing a spike like this. They would already be set at the accurate range without the interaction of the Federal Government.
