Comment by tedggh
17 hours ago
“Higher rates means financing/borrowing is more expensive. Mortgage rates will go up,…”
This is highly inaccurate. The 10 year US treasury is a better metric for predicting mortgage rates. We saw this during the past interest rate cuts, interest for loans and mortgages still went up, remember? I do, because I was borrowing at the time. And why was that? Because the 10-year treasury continued going up, and that matters more than short term interest rates. The 10-year treasury is about expectations about the future, so we need to look at how the market responds before screaming mortgage rates will go up, they could actually go down.
Variable rate (loans) track the Fed rate. Fixed rate (loans) track the long term treasury yields.
I didn’t say it was the best metric, but they trend in the same direction over time.
The 10 year and fed rates are usually correlated. Occasionally rates spike or dip without moving the 10 year, but these events are brief. This could be a short spike, but only time will tell.