Days of rates below 4% may be over for good

by MPA24 Jun 2013
The surge in Fannie and Freddie bond yields has yet to abate, with yields hitting their largest weekly increase in four years.
 
On the back of statements from Federal Reserve chair Ben Bernanke that the Fed could wind down its bond buying program should the economy continue to improve, yields on Fannie Mae and Freddie Mac mortgage bonds posted the seventh rise in the past eight weeks. The Bloomberg index has indicated that Fannie Mae 30-year securities rose to a 22-month high, tracking up 15 basis points to 3.44% on Friday. The week saw bond yields rise 0.5 percent, which Bloomberg has reported was the largest rise since June 2009.
 
The rise has caused some industry commentators to sound the death knell for record-low borrowing rates. Greg McBride, senior financial analyst for Bankrate.com, told The New York Times that the days of sub-four percent rates were over.
 
"Clearly, mortgage rates and bond yields will be higher in the long run than they are today. I don’t think rates will go back below 4 percent,” McBride said.
 
But McBride told The New York Times he also does not expect the market to remain as volatile as it has proven in recent weeks.
 
"Mortgage rates tend to move a lot in a short amount of time, then do nothing for a longer period. Rates will stabilize and potentially pull back as Bernanke’s words fade and economic reality sets in," he said.

COMMENTS

  • by Philip Maynez | 6/24/2013 9:32:16 AM

    This happens every few years. Rates will be back down when the mom and pops start buying treasuries since they can actually make some money now. and when the government starts funding the employee retirement fund after Labor day

  • by Peter Padilla | 6/24/2013 10:04:15 AM

    Anyone that is still on the fence to buy or refinance should get going now. Lock today if possible to protect today's interest rate on your mortgage mortgage. I'm a home mortgage lender in Nevada and our company is reapeating the same directive almost every day: lock today.

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