Our recent focus has been on the FED and when they will begin their rate cuts this year. Inflation has been staying stubbornly high and the delay in when they’ll start cutting the FED rate has pushed mortgage rates “higher for longer” as they have said.
While the FED is important to rates, it specifically affects business and consumer rates such as auto loans, credit cards and home equity loans. The effect on mortgage rates is a little more indirect but still a factor.
However, the Treasury department snuck out an announcement on Tuesday (4-23) that they will be announcing a T-Bill (bond) buyback program next week!
This hasn’t made the front page of any news yet but could have a much more dramatic effect on mortgage rates then the FED!
As I mentioned above, the FED rates are tied directly to consumer loans however “long term” loans, such as a 30-year fixed mortgages, are tied directly to T-Bills by competing for the same investor.
Below is a clip of the 10yr T-Bill and 30yr fixed mortgage to see the coloration:
It will be interesting to see how this announcement next week will affect mortgage rates but I’ll be watching!
Here are a couple links to interesting articles that provide a little more info if you’re interested.
Relationship Between Treasury Notes and Mortgage Rates (thebalancemoney.com)
