Treasury Yield Surge Adds Pressure to Home Loan Costs
The 10-year Treasury reached 5.234%, its highest point since June 2007.
Borrowing conditions for home shoppers and homeowners seeking to refinance tightened again Monday as Treasury yields moved higher. The 10-year note rose by more than five basis points to 5.234%, reaching its strongest level since June 2007. Because lenders use that security as a key reference for setting mortgage pricing, the move put additional strain on monthly affordability.
Other maturities climbed as well. The 30-year Treasury approached 5.56%, while the two-year note reached 4.918%. Oil was trading near $92 per barrel, adding to concerns about inflation. Mohamed El-Erian, Allianz’s chief economic adviser, said longer-term forces in the bond market could keep the 10-year yield near 5% even if energy prices fall. He pointed to an imbalance between bond supply and demand as a lasting pressure.
More economic reports could move markets this week. Investors were watching the August JOLTS report, core PCE inflation data, a quarterly GDP update, and Friday’s employment report. Strong labor figures have supported the Federal Reserve’s preference for keeping policy restrictive, which has helped keep mortgage rates elevated. Friday’s payroll report may be the week’s most important release for mortgage professionals and their clients.
Why it matters: Higher bond-market yields keep mortgage borrowing and refinancing costs elevated, narrowing the budget available to people buying or keeping homes.
- Mortgage Professional America