Interest Rates Going up – How High?

Interest rates are going up.

At least they did over the last week – and it was a pretty big jump.

Bloomberg reported on December 28th, 2009 with Morgan Stanley’s prediction:

Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The surge will push interest rates on 30-year fixed mortgages to 7.5 percent to 8 percent, almost the highest in a decade, Greenlaw said.

Well, it’s a little like Rocket Science, or at least advanced Economics, trying to understand the relationship between interest rates and yields on treasury notes and mortgage securities, but there’s a direct relationship.

The Washington Post reported on Saturday, December 26th 2009, that Freddie Mac believes a significant rate increase is inevitable in 2010:

Amy Crews Cutts, deputy chief economist at Freddie Mac, told the newspaper that interest rates were bound to rise to 6 percent by the end of 2010 because private buyers would demand a higher rate of return on the securities than did the Federal Reserve, the U.S. central bank. Lenders may have to raise the rates they charge to consumers in order to make that happen.

I will keep a close eye on this and keep you posted.  Interest rates are up this week across the board, whether or not this is a trend we should get used to….well, we’ll just have to wait and see.

Other articles about this topic that might interest you:

1. CalPERS Interest Rates – Click to View CalPERS sets interest rates daily to the benefit of it’s members.  Find current interest rates here: Current Interest Rates The...
2. CalHFA Reduces Interest Rates – August 8th, 2008 In such a volatile market as we’re in right now, on a day when conventional interest rates went up...
3. CalSTRS Interest Rates – Click to View Current Interest Rates for all CalSTRS Home Mortgage Programs ...

Tagged as: mortgage rate, Rates, treasury yield