Bank of America mortgage rates have been in a tight range between 5% and 5.5% for almost two months now. Every time we see the average drop mortgage rates to closer to 5% there is a strong increase in the production of 10-year Treasury sends much higher rates. As soon as the mortgage interest rate get about 5.5% Federal Reserve Bank makes it a point to announce that they'll do whatever it takes to keep rates near historic lows.
After the speeches of Fed rates fall all the way back down to 5% up to repeat the process. This has been happening since the beginning of July and see how it will stay that way until the end of September 2009. In late September 2009 Federal Reserve Bank plans to stop buying U.S. Treasuries together. For the past eight months, the Fed has been buying up Treasury to help push interest rates lower. Now that they are stopping this, it will be very interesting to see Treasury yields react.
If Treasury yields react the way most people think, we see a strong performance up on the production rate 10-year Treasury will bring mortgage rates right along with him. Production of 10 years was in a strong upward trend for much of 2009 but appears to decrease recently has been a major reason that the fixed rate mortgage of 30 years has remained relatively low. That might not be the case for much longer.
Sunday, November 8, 2009
