This is the 8th issue of the weekly overview of interest rates impacting real estate: 10-year constant-rate Treasury Notes and 30-year fixed-rate residential loans. To see the prior Issue click http://blog.stewart.com/stewart/2015/07/12/interest-rates-impacting-real-estate-july-10-2015-issue-7/
The first graph shows the 10-year Treasury note for the past 30 days. The 10-year Treasury closed Friday at 2.36 percent. For the second time in 30 days Fed Chair Janet Yellen reiterated that she believed rate hikes would commence sometime in 2015 due growth in the U.S. economy.
The following table shows the 10-year Treasury Note year-to-date.
The red star is the day of the start of this blog series in each of the three following charts.
The 30-year fixed-rate conventional mortgage rate from Freddie Mac’s weekly series is shown year-to-date in the following graph. This series is highly correlated to the 10-year Treasury Note — see the analysis in a previous blog at http://blog.stewart.com/stewart/2015/05/19/interest-rates-going-no-place-but-up-installment-1/
At 4.09 percent, the current 30-year residential rate is at the 2015 high point. This is the highest rates have been since mid-October 2014.
The following chart is the yield difference between 30-Year Fixed Rate Loans and 1-year Adjustable Rate Mortgages (ARMs) as reported weekly by Freddie Mac. 30-year rates are currently 159 basis points greater than 1-year ARMs, the greatest thus far in 2015. I believe this spread is a good indicator of where 30-year interest rates are headed.
I remain steadfast behind my prior forecast of 5.2 (to 5.6) percent 30-year rates by the fall of 2016. If not sooner.
To read my forecast click http://blog.stewart.com/stewart/2015/05/27/interest-rates-no-place-but-up-installment-2/
Despite the temporary slight slip in rates, they are headed No Place But Up.
Forecast by Fall 2016
30-Year Rates 5.2 Percent
10-Year Treasury 3.46 Percent
If you have any questions or comments please email back.
Ted