Bank of America’s (NYSE: BAC) mortgage interest rates for refinances are the lowest that consumers have seen in months. BofA’s mortgage rates have steadily dropped over the last several weeks despite the 10 year treasury rates recent up-tick. The 30-year fixed rate for conventional mortgages dropped to 4.82%, while the 15 year fixed rate has dropped to 4.29%.
The interest rates consumers are able to receive this week are a bit unique. It’s unusual that mortgage interest rates are going down despite the fact that the 10 year treasury’s yield has broke through its 50 day moving average, indicating an increase in treasury rates, which often correlate with mortgage interest rates.
If the 10 year treasury yield continues to increase and pulls the 50 day moving average into an upward trend, mortgage rates are likely to increase soon. At the tail end of the summer, mortgage rates stayed above 5% because the 10 year treasury rate was trending up. Once the 10 year treasury yield rate started heading down and hit its 200 day moving average, mortgage rates dropped accordingly.
With the Federal Reserve recently announcing that it would soon cease purchasing US Treasuries, driving interest rates and mortgage rates down, it’s likely that treasury yields and mortgage interest rates will increase throughout the next year. During the next few weeks, it’s possible in the short term that the 50 day moving average on treasury yields will be flat or slightly lower, but it’s unlikely that mortgage rates will dip much lower than they are now.
Consumers that are thinking about refinancing would be well-advised to make their moves soon. If the 10 year treasury yield continues its upward trend and gains any significant momentum, consumers are likely to see interest rates between 5.5% and 6.0%. Several lenders are currently offering mortgage rates below 5%, including Bank of America. Consumers looking to refinance would be wise to lock in low rates while they are still available.
