Bond yields indicate upward trend in Mortgage Rates

Classified as: Interest Rates, Mortgage, News

There are signals that mortgage interest rates will go up in near future. Leading indicator for this trend is increase in yields for mortgage-bonds issued by Fannie Mae and Freddie Mac. Upward trend is quite strong as it is persistent since last five days.

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Mortgage refinance activity is also slowing down as lending banks are also stalling on existing applications. There is a 21 percent decline in new mortgage refinance requests. Analysts believe that the downward trend is due to recent hikes in mortgage rates which are significantly up from historic low reached earlier this year.

Mortgage Rate Outlook

Average rate for 30 year fixed mortgage was at it’s historic low of 4.78 percent during April 2009. On August 5th, 2009 it is stable at 5.22 percent after going up to 5.59% in June 2009. Both short term and long term outlook for fixed rate mortgage is bearish. All signs are indicating upward movement for the rates.

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