Question

Why does the 30 year mortgage rate so closely match the 10 year treasury bond YTM

Answer 1

Explanation:

There is a strong correlation between mortgage interest rates and Treasury yields, according to a plot of 30-year conventional mortgages and 10-year Treasury yields using Federal Reserve Economic Data. Mortgage interest rates are higher than Treasury yields because mortgages are riskier than Treasury bonds.

Answer 2

Answer:

Banks intentionally track the 10 year treasury bond YTM.

Explanation:

30 year mortgages usually only last about 10 years because people will sell their homes.