The average 30-year fixed mortgage rate was 6.65% this week through Wednesday, down from 6.67% a week earlier, according to Freddie Mac. Mortgage rates fell slightly last week despite a big jump in bond market volatility. The small drop came during a very unstable week for the bond market. Long-term US government bond yields moved sharply as investors worried about inflation and the country’s growing budget deficit.
The 30-year Treasury yield reached its highest level since 2007. Long-term government bond yields briefly moved above 5.3% on Tuesday, their highest level in 19 years, as investors became more concerned about inflation and the US fiscal deficit, according to Yahoo Finance. Mortgage rates don’t move in lockstep with the 30-year Treasury yield. Many sell their homes or refinance well before the loan matures, making the 10-year yield a more useful indicator for where mortgage rates are headed.
Because most homeowners don’t hold onto the same mortgage for the entire 30-year term, instead, they tend to track the 10-year Treasury yield more closely. The Treasury then stepped in to support the bond market.
