The Real Deal Miami

As Treasury yields fall, analysts fear mortgage rates will follow

June 30, 2010 03:45PM

The 10-year Treasury note’s yield has fallen just below 3 percent, and it’s dragging mortgage rates down along with it. If the yield dips further — particularly, if it crosses the 2.8 percent mark that market analysts say is critical — mortgage rates could drop so far as to spur homeowners to refinance the 5 and 6 percent loans they took out over the last year-and-a-half. That’s bad news for investors in mortgage-backed securities, on which prices are near record highs. Following yesterday’s drop in Treasury yields, the price of the 5 percent mortgage securities coupon — which is reflective of mortgage rates — fell to 104.75 from 106.0625. [Fox Business]