The yield curve is probably not discussed in your everyday conversation…but in the mortgage industry…it is a big deal! In normal financial markets, the rate for a 5, 7, 10, 15, 20 and 25 fixed mortgages, should be lower than the 30 year fixed. However, the industry has seen a flattening of the yield curve between all of these intervals and the 30 year fixed rate. It appears bond investors aren’t sure where the short term rates will be in the future and they don’t want to be left holding those bonds if Fed actions and/or world events dictate higher interest rates. So without getting too deep here, if you are purchasing or refinancing soon, a 30 year fixed mortgage will likely be your best value.
Leave a Reply