Mortgage Bond Yields Decline to 3-Month Lows

Yield on mortgage securities dropped to their lowest levels in three months, a sign that mortgage rates on new homes will decline further.

Yields on Fannie Mae’s current-coupon 30- year fixed-rate mortgage bonds fell to 4.29% as of 3 p.m. in New York, the lowest since May 26, according to data compiled by Bloomberg. Yields are following Treasury rates down as recent auctions have been over-subscribed.

The demand for Treasuries and the drop in Fannie and Freddie coupons augers will for a drop in mortgage rates. The average rate on a typical 30-year fixed-rate mortgage dropped to 5.07% in the latest week based on data from Freddie Mac. That’s down from a high of 5.59% percent in June but up from the record low of 4.78% in April. Analysts believe that rates need to drop below 5% to spur another wave of refinancing. We're close but it's hard to believe rates will go below 5% or stay there for much longer with more Treasury sales coming and the economy beginning to show some signs of life.

While homeowners may have missed the rate bottom in April, now may be a good time to think about refinancing, if you haven't already.

Sol Nasisi
Sol Nasisi: Sol Nasisi is the co-founder and a past president of BestCashCow, an online resource for comprehensive bank rate information. In this capacity, he closely followed rate trends for all savings-related and loan products and the impact of rate fluctuations on the economy. He specifically focused on how rates impact consumers' ability to borrow and save. He also has authored a wee

Add your Comment

or use your BestCashCow account


Featured - 30 Year Fixed Mortgage Rates 2024

Lender APR Rate (%) Points Fees Monthly
Learn More
PenFed Credit Union
NMLS ID: 401822
6.427% 6.250% 0.88 $6,000 $1,971 Learn More
Mutual of Omaha Mortgage, Inc.
NMLS ID: 1025894
6.956% 6.875% 0.63 $2,655 $2,103 Learn More
Rocket Mortgage
NMLS ID: 3030
7.451% 7.375% 0.75 $2,400 $2,211 Learn More
NMLS ID: Not a Lender
Learn More