Mortgage Rates Up as Yields Spread

Yields on Fannie Mae, Freddie Mac, and Ginnie Mae mortgage bonds continue to widen as compared to US Treasuries. This gap is pushing mortgage rates back up. The current yield spread bumped nearly 21 basis points to 224 basis points yesterday. The widening spreads on mortgage bonds are a combination of effects from central banks selling off these bonds for more liquid US Treasuries, investors being attracted to higher yields of corporate debt now backed by government guarantees too, and confusion in government statements about Fannie and Freddie new debt issuance. Expect mortgage rates to continue to fluctuate--current pressure indicates climb in mortgage rates.