HLS or Pasadena broker and mortgage professionals have more expert takes then I do. With that said long term mortgages have ALWAYS trended in the same direction of the 10/30 year treasury yields. The risk premium that is built in by the originators will fluctuate based on many factors but mostly on the secondary market. When we saw the secondary market lockup in August, that risk premium jumped way up. However memories are short and it went down after several weeks. Obviously the risk premium for a conforming loan that is FHA approved is the lowest. The premiums go up with jumbos, etc…
Now how low will rates go? Don’t know and don’t have a clue. Will they TREND in the same direction as the long term treasury yield? Absolutely. Will the risk premiums vary? Absolutely.
Your mission then is to find the best time, that is when the 10 or 30 year treasury yield is low AND the risk premium is low. Since you do not have much knowledge of the risk premium all you can do is monitor the 10 year.
Of course there is continuing bad news about foreclosures but for people to think mortgage rates will not budge while the 10 year yield plummets is not realistic.
Finally, long term rates do not just move lock step with the 10 year. As any shmuck in life knows, you get screwed on the way down and double screwed on the way up. In other words, lenders are sticky on the way down and they will not lower rates immediately even though the 10 year may go down. They may wait a day or a few days to make sure it doesnt spike back up, then they will lower them. Also many times one will not lower a rate until the other does, then they all do at once. Of course the SECOND the yield moves back up they all raise rates up immediately.
