Mortgage Rates Soar the Past Two Months Due to Higher 10 Year U.S. Treasury Yields

For the past couple of years, homeowners who have a mortgage on their property have enjoyed the lowest mortgage rates in the past 60 years. Those days have come to an abrupt end as mortgage rates continue their relentless increases higher, following 10 year Treasury yields higher.

Mortgage rates today on 30 year conventional loans are averaging 4.61 percent, a big increase from last week's average 30 year conforming mortgage rate of 4.34 percent. During the past week, 10 year Treasury yields moved from an average of 2.50 percent to 2.65 percent.

The increase in mortgage rates over the past two months has been considerable. In early May, 30 year mortgage rates were more than 1.00 percent lower, around 3.50 percent. There are lenders still quoting 30 year rates below the averages around 4.00 percent if you're willing to pay points but not as low as 3.50 percent.

While higher mortgage rates have killed demand for homeowners looking to refinance their loans, the housing market overall is still on a tear. Home prices posted the sharpest increases in 7 years in CoreLogic's most recent housing report. Average home prices shot up 2.6 percent from April to May and up 12.9 percent compared to last year's home prices.

CoreLogic economists are also predicting an acceleration of home price increases for the month of June. They are predicting home prices will have increased 2.9 percent from May to June, which will drive the year-over-year price increase up to 13.2 percent. The biggest factor that is driving home prices higher is the low number of homes for sale in inventory.

Another benefit to higher home prices is millions of homeowners once again have positive equity in their homes. Unfortunately, the change comes too late to refinance for many since record low refinance rates are a thing of the past. The Mortgage Bankers Association reported that their Refinance Index decreased 16 percent from the previous week and is at its lowest level since July 2011.

As refinance rates move higher from record lows, refinance demand decreases. The general rule when refinancing a home loan is if refinance rates are at least 1.00 percent lower than your current loan rate, it makes financial sense to refinance. Another factor when refinancing is whether or not there are upfront costs to pay. You may need to plan to stay in your existing home at least a few more years in order for the refinancing to payoff.

Average 15 year mortgage rates today are at 3.61 percent, up 20 basis points from last week's average 15 year mortgage rate of 3.41 percent. If you are refinancing a loan and you can afford for your mortgage payments to be higher than your current payment, you should seriously consider a 15 year loan instead of a 30 year loan. You can use a mortgage calculator to see how much you will save in interest payments refinancing to a 15 year loan from a 30 year loan.

Average 30 year jumbo mortgage rates currently are at 4.82 percent, up from last week's average 30 year jumbo mortgage rate of 4.69 percent. Today's mortgage rates on 15 year jumbo loans are averaging 4.10 percent, up from the previous week's average 15 year jumbo rate of 3.97 percent.