InvestingMarkets & Economy

How far down can mortgage rates go?

What to watch so you have a heads-up when mortgage rates fall
  • Watch the U.S. 10-year T-note (UST-10), not mortgages. The 10-year is the driver, mortgages always following.

A boy once asked Abraham Lincoln how long a man’s legs should be, and Abe replied, “Long enough to reach the ground.” This past week, mortgage rates just set a new all-time low, about 3.25 percent (“about” because of the always indefinite mixtures of fees at a given rate found by survey). The prior low was not far above, but back in 2012. Before this Great Recession cycle, the prior low was 4.00 percent -- the first rate pegged by the VA in 1944. Rates have risen in the last week -- not much -- and it’s reasonable to ask if we’ll see a new record, or a series, and how far down. “When” is impossible even to guess, but why we may see new records and how far down are worth studying. Keeping an eye on the future First of all, watch the U.S. 10-year T-note (UST-10), not mortgages. The 10-year is the driver, mortgages always following. The linkage is not exact, as foreign money favors Treasurys, and the mortgage market is often temporarily congested by waves of r...