The best way to monitor the 30-year fixed rate mortgage market is to keep an eye on the 10-year Treasury yield, which is one of the indices that bankers and mortgage agencies, like Freddie Mac and Fannie Mae , use to set the price. their loans every morning.

Mortgage rates and treasury bills change daily based on supply and demand. The demand comes from investors buying zero-risk bonds guaranteed and backed by the full force of the United States of America. The January 4 yield on the 10-year bond rose from 1.40% last month to 1.68%.

So, you might be wondering, who the hell would make an investment and tie up a bunch of money for 10 years for a 1.68% rate of return?

Pension plans like the California Public Employees Retirement System, California State Teachers Retirement System, municipalities, countries like China, 401(k) plans, and people who want to make a flight to quality for some of their retirement funds and investments are those who the buyers are today.

The pandemic, inflation, global warming, our government, the Build Back Better plan, the national debt, government spending, huge deficits, income tax increases, riots and looting, the cheeky smash and hoarders a 2008 type crash from stocks stretched stock market valuations are all things people can be afraid of, and so they want to diversify their funds from 99% in stocks and real estate to maybe 80% on these markets and 20% in cash and bonds.

The national average the week of Dec. 31 for the 30-year fixed rate on loan amounts under $647,200 was 3.34% and jumbo loans were 3.25%, which is highly unusual as jumbos are historically higher and considered riskier than conforming loans. I can guarantee one thing: Mortgage rates will change in the future, or at least that’s what I’ve taught my loan officers and clients over the past 20 years when they ask me what I think of rates. The latest numbers prove what I mean: the average 30-year fixed-rate loan the week of January 7 rose to 3.52%.

I always suggest people lock in their loan on the date of application, because it’s a much better deal to get locked in and see rates drop during the process than to float and see rates skyrocket.

My prediction for 2022 is that mortgage rates should stay below 4% for the next year, which is historically great for a home loan and the American Dream.

Jim Porter, NMLS #276412 is the Branch Manager of Solano Mortgage, NMLS #1515497, a division of American Pacific Mortgage Corporation, NMLS #1850, licensed in California by the Department of Financial Protection and innovation within the framework of the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.