These are all quite interesting answers. Honestly though? Mortgage rates have jumped because on 10/23 the 10 year treasury yield sat at about 3.54% and on 10/31 the yield closed at 3.97.
So while interest rates “should” do this or do that with respect to the above arguments, the fact of the matter is that long term mortgage rates will pretty much follow the treasury yield. The wildcard is the spread which is the risk premium. Last year or 2 years ago the risk premium was about 1.25 points and today it is a little more then double that. So go figure.
What you have seen is a selloff in treasuries. Probable cause is the equity rally.
Make no mistake, interest rates will rise quite substantially in the future. That will have a substantial effect on housing. My read is the treasury yield will fluctuate betwen 3.5 and 5 for the next year or so. Just a guess.
