Stock Market is Volatile, Causing Mortgage Interest Rates to Rise

Stocks and mortgage rates generally move in the same direction and that occurred on Monday & Tuesday. Both fell on Monday and rose on Tuesday, and throughout the week continued to occur. This happens because when stocks rise, the demand for treasury bonds falls, which causes treasury bond yields to move higher. The opposite occurs on down days for the stock market.

You may have noticed on my other newsletters that I tend to talk a lot about 10 year treasury bond yields. Why? Well because when 10 year treasury bond yields rise, mortgage interest rates rise as well. Currently the 10 year treasury yield is 2.83% and soon enough will reach 3%.

Another important factor last week was the Senate passing a two-year budget deal. This deal will increase the budget deficit. Therefore, this will increase the future supply of bonds, which put upward pressure on treasury bond yields.

Current Mortgage Interest Rates

Screen Shot 2018-02-11 at 11.21.38 AM.png

As these rates continue to rise, owning a home becomes more expensive for home buyers. These home buyer setbacks can correlate with home values because home prices can fall when a buyer's purchasing power is low. Luckily, housing supply is extremely low and there are many buyers on the market so home sellers are still in a good position to sell. Basic economics- supply & demand. Sell your home sooner than later or wait for the next business cycle. 

Screen Shot 2018-02-11 at 12.29.07 PM.png
Andrew Vargas