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Rising Bond Yields Pressuring Fixed Rates

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The 5-year government yield (which leads 5-year fixed mortgage rates) pierced 2.80% on Friday. It’s risen almost .35% in two weeks. That’s squeezed gross lender margins on deeply-discounted five-year rates to near 1.00% (1.20% can be considered “normal”). As a result, ultra-low fixed rates are in danger of rising .10% or more higher, especially if this yield trend continues. The 5-year rates are still at all time lows, but they may not last if this trend continues. Keep in mind; this perspective refers to fixed rates in the short term. Although rates continue to trend upward, they can drop down unexpectedly due to unforeseen circumstances as we saw recently. Should interest rates continue to rise as predicted; now is an optimal time to get a pre-approval done and secure a low rate for the next 120 days.
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