Rate Watching? Take a Minute To Learn About This Key Indicator

 

The graph above shows the relationship between the 10-year Treasury bond rate and the 30-year fixed mortgage rate over a period of 32 years. You can see how these rates generally move together, with changes in the Treasury rate often corresponding to similar shifts in the mortgage rate.

10-year Treasury Bond:

The 10-year Treasury bond is considered a benchmark for many long-term interest rates, including mortgages. 

Mortgage Lenders use the 10-year Treasury bond rate as a baseline to determine the interest rates they offer on mortgages. If the 10-year Treasury rate increases, lenders typically raise mortgage rates to maintain adequate margins. Conversely, if the 10-year Treasury rate decreases, mortgage rates often follow suit.

What Factors Impact the 10-year Treasury Bond Rate/Mortgage Rates?

Both Treasury bonds and mortgage rates are influenced by the overall economic environment. Factors like inflation, economic growth, and Federal Reserve policies affect investor behavior and interest rates across the board.