Goodbye sub 3% mortgages

It was only last July that the 30-year Fixed Rate Mortgage (FRM) dropped below 3% for the first time and this week it moved back above 3% again, following the direction of the 10-year Treasury Note (10T).

Mortgage rates

The latest survey from Freddie Mac returned a rate of 3.02% and earned this comment:
“Since reaching a low point in January, mortgage rates have risen by more than 30 basis points, and the impact on purchase demand has been noticeable. While purchase activity remains high, it has cooled off over the last few weeks and is currently on par with early March, prior to the pandemic. However, the rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”

The key to the level of the FRM is the 10T. Investors in mortgage-backed securities (bundles of mortgages sold to investors) require a premium – spread – over the yield on 10T.

The chart below shows three rates: the top line in orange shows the rate on the FRM; the blue line at the bottom is the yield on 10T; and the grey line (mostly) in the middle is the difference in the rates – the spread.

Mortgage spreads

For most of the time in recent years this spread has been in the 1.6- 1.8% range. The exceptions have been in times of financial stress: the Great Recession and COVID-19.
Mortgage rates

The current spread is just 1.48%, suggesting that the FRM is actually lower than it would be based on the historic normal spread of 1.6-1.8%.

Regardless of the short-term movement, mortgage rates remain cheap as show by this chart:

Mortgage rates

Read these recent articles:
Mortgage Rates are Rising
How Marblehead’s 2021 Property Tax Rate is Calculated
Essex County 2021 Residential Property Tax Rates: Town by Town guide

If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, please contact me on 617.834.8205 or

Andrew Oliver
Sales Associate | Market Analyst |

Naples, Bonita Springs and Fort Myers
m. 617.834.8205

Andrew Oliver
Market Analyst | Team Harborside |
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205

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“If you’re interested in Marblehead, you have to visit the blog of Mr. Andrew Oliver, author and curator of Oliver Reports . He’s assembled the most comprehensive analysis of Essex County we know of with market data and trends going back decades. It’s a great starting point for those looking in the towns of Marblehead, Sale, Beverly, Lynn and Swampscott.”