The 10-year treasury yields directly impact mortgage rates. If you’re looking for a home now, you need to know the basics and what could be coming…
Here are the basics of what you need to know:
So as the treasury yield rises, you’ll get more money back from your bond, which is an excellent low-risk investment option compared to stocks.
The 10-year treasury yields directly impact mortgage rates. It’s possible the yield will dip back down, but if it stays above 3% and keeps climbing, that means mortgage rates will also go up.
If you’re looking for a home now, you know, the current fixed rates are at an all-time low. There haven’t been better rates than this since the 1950s. But we can expect this to last forever and the rise of treasury yield indicates things could be changing soon.
With an Adjustable Rate Mortgage, or ARM, you receive an introductory rate at a fixed level for a certain number of years, traditionally five years, and then this rate will jump.
5-year ARMs are attractive because you get low interest up front, letting you purchase a better home with less money. But since the rate after those years is usually increasing exponentially and will be unpredictable, this is really only a good idea if you’re sure you’ll be out of that house within the first five years.
The problem is you have no idea what will happen in those five years. People have all sorts of plans for their future, they plan to get a promotion or raise in the next few years, they plan to have kids, they plan to move to another city, but plans fall through all the time.
Then you’re stuck with a high-interest mortgage until you can get out, which may take longer than you’re able to support.
I recently got a text from my dad, which shared with me that his Adjustable Rate Mortgage in 1981 was 15.5%, which means the fixed mortgage rate was even higher. But we have it so good right now! You can get a fixed mortgage anywhere from 3% to 5%. It’s an amazing time to buy a home, but even as things change in the future, it’s important to make decisions that are best for your future, not just for right now.
That’s where I can help! First I would love to answer your questions about anything related to your financial prosperity and quality of life. Secondly, our team enjoys helping you find the best mortgage loans and giving you the peace of mind that you can handle your loans in the long-term, regardless of how the world changes around you. We can help.
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