3d • General discussion
📘 Teaching Tuesday 📘
Why Mortgage Rates Follow the 5-Year & 10 Year U.S. Treasuries (Not the Fed)
- Many people assume mortgage rates move when the Fed cuts or hikes rates. In reality, mortgage rates are more closely tied to the 5-Year U.S. Treasury as well as the 10-Year U.S. Treasury
Here’s why:
- Mortgage-backed securities (MBS) compete with 5 & 10-Year Treasuries for investor money. When the 5 or 10-Year yield rises, investors demand higher returns on mortgages and this pushes mortgage rates up. When it falls, mortgage rates usually follow.
How this shows up today:
- Even when the Fed signals rate cuts, mortgage rates may stay elevated if the 5 & 10-Year Treasury remains high.
Borrower takeaway:
- If you’re watching rates, track the 5 & 10-Year Treasuries not just Fed headlines.
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📘 Teaching Tuesday 📘
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