Are Mortgage Rates about to rise?

In normal times, the 30-year Fixed Rate Mortgage (FRM) is priced based upon the extra yield investors require over and above that which can be received on the US 10-year Treasury Note (10T). In recent years that extra yield – spread – has averaged 1.7%.

2020, as you may have noticed, has not been normal. In the peak of the disruption to mortgage markets in April the spread reached 2.7%, as the yield on 10T was driven sharply lower, dropping from 1.8% at the beginning of the year to as low as 0.55%.

But recently, the yield has been climbing and now approaches 1%.  And the spread over 10T has been under 2% for the last three weeks.

The FRM I use for my calculations is the rate in the Freddie Mac weekly national survey of lenders. This is published on Thursdays and is based on rates in the Monday-Wednesday period. I suspect there will be a small uptick in the survey rate published tomorrow and that, if the higher yield on 10T is sustained, there will be a larger increase next week.

I will publish an article on the 2021 outlook for mortgage rates this coming Saturday.

Andrew Oliver
Market Analyst | Team Harborside |

Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205

Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated

“If you’re interested in Marblehead, you have to visit the blog of Mr. Andrew Oliver, author and curator of He’s assembled the most comprehensive analysis of Essex County we know of with market data and trends going back decades. It’s a great starting point for those looking in the towns of Marblehead, Salem, Beverly, Lynn and Swampscott.”

“Some people use stats the way a drunk uses a lamppost: for support rather than for illumination”


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