Is this the end of mortgages under 4%?

The “will they won’t they” saga of when the Federal Reserve will increase interest rates took another yesterday as the jobs report saw with 271,000 new jobs added, a decrease in the official unemployment rate to a flat 5 percent, and a pick up in wage growth to an annualized rate of 2.5 percent, the fastest pace in about 6 years. The yield on the 10 year Treasury (the bench mark for 30 year Fixed Rate Mortgages – FRM) jumped to 2.34%, bringing speculation that we could be about to see the end of mortgages under 4%.

There are two charts here. The first shows the spread – the difference between the FRM and the 10 year Treasury yield. For consistency I use Freddie Mac’s weekly survey, which is published on Thursdays but reflects data from Monday to Wednesday each week from 125 lenders nationally. Thus, the FRM quoted here for this week does not reflect the increase in market interest rates following yesterday’s economic news. The second chart shows the actual 10T yield and FRM rate.

Since the Federal Reserve has said that its decision on when to start to “normalize” interest rates will be data driven, this week’s news would seem to give it every reason to make a move in December. While many things could happen in the next month to cause yet one more delay, as of now an increase in December seems probable.

And we are likely to see the FRM  very close to 4% this week as a result of Friday’s news.

US Treasury, Freddie Mac

Freddie Mac and US Treasury

If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 617.834.8205 or

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Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated

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