Mortgage Bond Yields Highest In Months
Mortgage bond yields rise to highest point in months.
The rising mortgage rates in 2013 are a sure indication that home buyers better start investing now. Mortgage bond yields have risen to a high which hasn’t been seen in 10 months. For this reason, it seems as though the longer consumers let the year drag on, the more they’re going to have to spend on their mortgage.
According to research carried out by Freddie Mac and his mortgage rate survey, last month had the average 30-year fixed mortgage bond yields at a sizeable 3.53 percent — and based on research carried out by Mortgage Bankers Association (MBA) it’s likely to rise to a massive 4.40 percent within the duration of 2013.
In addition to this, the 15-year rate for mortgage bond yields jumped to 2.81 percent, which is a whole 0.10 percent higher than its previous 2.71 percent.
Look at it this way: if a buyer has borrowed a total of $625,000 with a rate of 3.32 percent the previous year, he’s going to pay $2751 for his mortgage. Alternatively, a buyer at the end of 2013 (let us say) pays the same amount with a rate of the predicted amount of 4.40 percent, he will end up paying a total of $3,132 — you do the math!
According to chief economist for Trulia incorporated, Jed Kolko, the rising prices prove to be an advantage for all homeowners, but a great disadvantage for those looking to buy new homes, as it will mean that housing is generally more expensive.
Real estate in the United States is bouncing back on account of the fact that homebuyers continue to compete with investors for
ever-decreasing home inventories.
At the same time and more recently, Fannie Mae’s 30-year securities rose 0.06 percent to 2.74 percent — which is recorded as being the highest since May 11. The yields displayed a significant rise at the same time, following the Federal Reserve’s announcement that it would buy $40 billion of home-loan debt.
Moreover, the visible increase in employment within the United States over the last month (employment grew by over 236,000) has shown that mortgage bond yields are most definitely too low — which adds to the overall speculation, as the largest economy in the world looks to be growing in strength — while the U.S Central Bank looks as though it is going to end its debt purchases by the end of the year.
Mortgage bond yields have increased by 0.02 percent, leading to a 1.28 percentage point — which is higher than an average of 5 and 10-year Treasury rates.
This is a rise for mortgage bond yields, from the all-time low point of 0.55 percent on September 25. As mortgage bond yields rise, it is more and more likely to see mortgage securities underachieve in the face of treasuries, as a result of the reduction of homeowner financing because of an increase in borrowing costs.
Judging by the spreads shown on the Fannie Mae coupon debt, as the economy slowly starts to display signs of improving, based on employment levels and so forth, the debt is likely to go on suffering more so than treasuries. This is also due as a result of the increased amount of bonds being traded close to face value.
Of course, since the Federal Reserve’s meeting at the end of January, mortgage bond yields have continued to rise significantly — but results show that despite this, they are still near lower than they have ever been. As stated above, it has been predicted that a steady rise should be expected throughout the year.
JPMorgan’s Analysts, headed by Matt Jozoff, have announced that it is likely to take months for managers to return to a neutral allocation of MBS: this is due to the rate of the selling of mortgage bond yields that they have experienced in recent weeks.
Mortgage rate growth is predicted to continue well into the year. Homeowners and homebuyers should look out for changing trends in mortgage bond yields. If homebuyers are on the prowl for a mortgage refinance, it might be a good idea to go ahead now, as rates have proven to be increasingly unpredictable.