Mortgage Rates Increasing on Inflation Fears

Mortgage rates have ticked upward over the past few days in response to market activity around the 10-year Treasury Bond. According to, the average interest rate for a 30-year fixed mortgage has increased from 5.00% to 5.39% in just a few days. An article in today’s Wall Street Journal goes so far as to proclaim that “Mortgage Rates Surge, Sap Hopes.” They cite similar interest rate figures from a different source and quote two

The Latest on Mortgage Rates

Time for an update on mortgage rates!  As has been written in this space before (here and here), mortgage rates are currently being driven by inflation expectations.  The Federal Reserve has been focused on supporting the economy by lowering short-term interest rates at the expense of the dollar, which is one cause of inflation (another major one being the huge demand for oil/energy in China). The graph on the left compares mortgage rates for 30 year fixed

The Fed and Mortgage Rates

The Federal Reserve Board announced a further 0.25% cut to the closely watched Federal Funds Rate yesterday, bringing the short-term interest rate down to 2.00%. More importantly, they also signaled that this would be the last rate cut for a while. As has been discussed in previous posts, mortgage rates have recently been moving in the opposite direction as the Federal Funds Rate. Mortgage rates are long-term and are very sensitive to inflation expectations. The

Mortgage Rates (Inflation vs Recession)

I see articles about interest rates going down every time I scan the business news. Either the Federal Reserve just cut rates or Wall Street is demanding further cuts. Yet after briefly going down, mortgage rates are again on the rise. What gives? The key to this mystery is that mortgage rates are based on long-term interest rates (like the 10-year Treasury rate) rather than the short term rates that Federal Reserve influences. Short-term and