Current Mortgage Rates: Mortgage Rates May Reach 7.5, 8%. – Morgan Stanley

David Greenlaw - Morgan Stanley Economist

Morgan Stanley chief fixed-income economist David Greenlaw made some startling comments yesterday as reported by Bloomberg. David says the benchmark 10 year treasury yield, a leading indicator for conforming mortgage rates, will rise about 40% to a whopping 5.5%. The yield, currently at 3.81 +0.059 (+1.57%) today, is approaching a 1 year high. Greenlaw says the rise in the treasury yield ^TNX will push 30 year fixed mortgage rates to 7.5, 8%, levels not seen in over a decade. Greenlaw says the coming rise in the 10 year treasury yield and mortgage rates is the result of actions taken by the government to avoid a depression over the past 2 years.

The last time 30 year fixed mortgage rates reached 7.5% was 2000.

The affects of a rise in mortgage rates like Greenlaw believes will happen are unknown. The recent strides made in the housing market after 2 years record low activity have everyone hopeful but high mortgage rates would be sure to slow things considerably. Can there be a recovery with mortgage rates so high? We’d have to think the government would do everthing in their power to keep mortgage rates low. Maybe home prices will decline so far that housing is still historically affordable despite higher rates.

Current Mortgage Rates

Current mortgage rates are up significantly from all time lows of just a month ago but still historically low. FreeRateUpdate.com research of wholesale mortgage lender’s rate sheets shows current mortgage rates are slightly different from yesterday with just the 15 year fixed rate changing for the better. Current mortgage rates for 30 year fixed loans are as low as 5.125% at par. Current mortgage rates for 15 year fixed loans are as low as 4.375% at par. Current mortgage rates for 5/1 ARM loans are as low as 4% at par. Par rates are the lowest available current mortgage rates and no not require any addition points or fees, also known as a buy down, to be paid by the borrower.

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