High Mortgage Rates Defy Drops Elsewhere
T-bill’s are yielding zero, the Fed Funds overnight rate is 1%, the 10 year bond is at 3% . . . and mortgage rates are still at 6%? What gives?
Traditionally, 30 year mortgages are 160 basis points above the 10 year bond. If that relationship held now, mortgages would be at 4.6%. Think 4.6% mortgages would stimulate home sales? You ‘betcha.
Unfortunately, like so many facets of today’s dysfunctional credit and equity markets, traditional relationships no longer apply, and gravity has been suspended, at least temporarily.