FILE - A sign announcing a home for sale is posted outside a home, Feb. 1, 2024, in Aceworth, Ga., near Atlanta. One of the reasons for the sharp run-up in home loan borrowing costs the last couple of years has been a wider-than-normal gap between long-term mortgage rates and the yield on the benchmark U.S. government bond. –
“When rates started rising, essentially we really didn’t know how high they would go or how long,” said Mark Fleming, chief economist at First American Financial. “Mortgage-backed securities investors said ‘I need to charge you more over the risk-free 10-year Treasury rate to be willing to buy a mortgage-backed security.’”
Still, while off its highs, the spread remains higher than it has been historically, and that creates upward pressure on mortgage rates. That means higher borrowing costs for homebuyers.
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