Mortgage Rates Moving Up

The bond market had been cooperating nicely the past few days if you are a real estate bear. The yield on the 10 year treasury has moved above 4.8%, which should result in higher mortgage rates by next week. The higher yields seem to be due to the new view that Fed Chairman Bernake is not an inflation dove and that he will continue to raise rates even if it means tanking the housing market. Also helping matters is the strength of the economies of other countries, in particular Japan. The general idea is that interest rates will continue to rise in the US as long as the Japanese economy continues to improve. Very simply, as the economy in Japan improves, interest rates there go higher and more money is invested in Japanese bonds. In order to keep too much money from flowing to Japan, US interest rates have to move higher in order to compete with the higher Japanese rates.