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NEWS
How the 10-year Treasury Note Yield Affects Mortgage Rates
If you’re wondering why mortgage interest rates for consumers don’t follow the Federal Reserve’s fund rates to banks, there’s a good reason.
Interest rates are tied to benchmarks based on how long the debt lasts. The federal funds rate applies to overnight lending between banks, while consumer mortgages are typically long-term, as much as 30 years.
That’s why mortgage rates are more closely aligned with the 10-year Treasury note yield. According to Investopedia, the yield reflects the interest the government pays to investors over 10 years, making it a more relevant benchmark for long-term loans like mortgages. Most homeowners don’t stay in their homes for 30 years anyway—the average is eight years, while the median is 13.2 years.
Lenders set mortgage rates by adding a “spread” on top of the 10-year Treasury yield. This spread accounts for the difference between mortgage-backed securities (MBS) and Treasury yields, as well as risk, inflation expectations, and market demand.
Curious how today’s rates affect your buying power? A Forever AgentSM can help you understand your options and plan your next move with confidence. Connect today at 303-905-8850 or visit BHHScoloradorealestate.com to find a trusted Forever AgentSM at Berkshire Hathaway HomeServices Colorado Real Estate.
Publisher's Letter
Dawa Sherpa, Publisher
The holiday season is upon us. A time to express appreciation for the people, experiences, and opportunities that enrich our lives. As we take a moment to give thanks and celebrate with our families and our communities – let’s not forget the uniquely valuable small, local businesses that are at the heart of our communities.
In today’s fast-paced world, shopping has never been more convenient with online giants and big-box stores offering rapid delivery and low prices. But, unlike mass retailers, small businesses and local shop owners offer personal relationships, leading to better service and customized recommendations. Whether it’s a handmade candle or boutique clothing, these businesses offer a personal touch that can’t be replicated.
The holiday season is a crucial time for small businesses. Events like “Small Business Saturday” remind us to support the shops that keep our communities vibrant. But it’s important to continue that support throughout the year to ensure these businesses thrive.
This holiday season, when shopping for a gift, a service, or just a little treat for yourself, consider visiting our local businesses first. Every purchase makes a meaningful difference, helping build a stronger, more connected community for everyone.
Happy Thanksgiving,
Dawa
