What effect will the latest news have on mortgage rates?

Kimberly Palmer writes:

Since 30-year mortgage rates tend to follow the yield of 10-year treasury notes, those rates have also fallen, explains banking consultant Bert Ely. Bankrate.com reports an average 30-year fixed rate of 5.78 percent, down from last week’s 6.08 percent. In August, 30-year fixed rates hovered around 6.5 percent.
But such declines could be temporary, says Keith Gumbinger, vice president of HSHAssociates.com, which tracks the mortgage industry for consumers. The weekend’s news underscores just how shaky mortgage investments are right now, which could drive rates up. While mortgage rates are attractive, lenders are increasingly picky about borrowers in the aftermath of the subprime mortgage crisis. Did that end up lowering rates? Will rates continue to drop? Ely points out that the mortgage rates could tick back up as quickly as they ticked down. Then the yield on 10-year treasury notes would be likely to rise again, driving mortgage rates back up.
Other factors to watch include inflation, economic growth, and changes to the Fed rate. But in this environment, even a cut to the Fed’s rate would most likely have little impact on the mortgage rates consumers face, Gumbinger says.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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