I have always been a strong advocate of the 10 yr as a barometer for long term mortgage rates. However Bubblesitter really nailed it that the correlation seemed to fall apart as the credit crunch has grown. As the original poster indicated the less risky the loan the stronger the correlation (plus some sort of margin)… However as you move away from conforming loans all bets are off.
Second point is that I disagree with the statement that mortgage rates follow the 10 year up and down some what instantaneously. Rates will always move up immediately when the 10 year moves up. They definitely do not move down immediately. Usually they do not move down unless the 10 year has moved down and stayed down for a few days. Like we always say…. sticky on the way down.
