The Relationship Between the 10-Year Treasury Bond Yield and the 30-Year Fixed Mortgage Rate
Now that we’ve handled that, let me tell you about the historical relationship between the U.S. Treasury 10-year bond yield and the 30-year fixed rate mortgage. Historically the 30-year fixed sits 1.50% above the 10-year bond yield. Today the 10-year bond is yielding 1.60 percent. So if we apply the logic above, 1.60 percent plus 1.50 percent equals a projected 30-year fixed at 3.10 percent.
However, as you may have noticed, the 30-year rate isn’t quite down to 3.10 percent. I take this to mean that there should be a downward pressure on interest rates and we should expect a continued decline in rates.
When the economic news is good and our growth is unmistakable, our investors will move from the safety of bonds and the yield will go up. Make sure to get in now to take advantage of historically low interest rates.
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