It’s Begun – BOND SELL OFF > 10 YEAR TREASURY YIELD > MORTGAGE RATES > STOCKMARKET > HOUSING MARKET > CREDIT/LIQUIDITY > RECESSION

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As Yields Soar, “Bond-Market Bloodbath” Will Hit Mortgage Rates at Worst Possible Time

So far this year, the 30-year-fixed has averaged 4.47%, versus 3.99% in 2017

Rates for home loans moved sideways in the most recent week, but the burgeoning bond market sell-off will likely hit mortgages in the coming weeks, setting up another test for a strained housing market.

The 30-year fixed-rate mortgage averaged 4.71% in the October 4 week, down one basis point from 4.72%, mortgage liquidity provider Freddie Mac said Thursday. That snapped a five-week stretch of gains for the benchmark product, which had recently hit its highest point since April, 2011.

The 15-year fixed-rate mortgage averaged 4.15%, also down one basis point. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.01%, up from 3.97%.

Those rates don’t include fees associated with obtaining mortgage loans.

Mortgage rates track the 10-year U.S. Treasury note TMUBMUSD10Y, +1.79%but with a lag. In the days covered by Freddie’s survey, bonds were whipsawed by geo-political events. The announcement of a trade deal between the U.S., Canada and Mexico buoyed stocks and diminished interest in bonds on Monday. But by Tuesday, concerns about Italy’s fiscal problems rattled markets, sending investors back into the perceived safety of bonds.

Bond yields move in the opposite direction of prices.

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