Whenever we try to forecast mortgage rates, we should consider the advice<\/a> of Mark Fleming, Chief Economist<\/em> at First American<\/em>:<\/p>\n\n\n\n \u201cYou know, the fallacy of economic forecasting is don’t ever try and forecast interest rates and\/or, more specifically if you’re a real estate economist, mortgage rates because you will always invariably be wrong.\u201d<\/em><\/p><\/blockquote>\n\n\n\n Many things impact mortgage rates. The economy, inflation, and Fed policy, just to name a few. That makes forecasting rates difficult. However, there\u2019s one metric that has held up over the last fifty years \u2013 the relationship between mortgage rates and the 10-year treasury rate.<\/strong> Here\u2019s a graph detailing this relationship since Freddie Mac<\/em> started keeping mortgage rate records in 1972:There\u2019s no denying the close relationship between the two. Over the last five decades, there\u2019s been an average 1.7-point spread between these two rates. It\u2019s this long-term relationship that has some forecasters projecting an increase in mortgage rates as we move throughout the year. This is based on the recent surge in the 10-year treasury rate shown here:The spread between the two is now 1.53, indicating mortgage rates could rise. Actually, a bump-up in rate has already begun. As Joel Kan, Associate VP of Economic Forecasting <\/em>for the Mortgage Bankers Association, <\/em>reveals<\/a>:<\/p>\n\n\n\n \u201cExpectations of faster economic growth and inflation continue to push Treasury yields & mortgage rates higher. Since hitting a survey low in December, the 30-year fixed rate has slowly risen, & last week climbed to its highest level since Nov 2020.\u201d<\/em><\/p><\/blockquote>\n\n\n\n![\"The](\"https:\/\/files.mykcm.com\/2021\/02\/22161207\/20210223-MEM-Eng-1.jpg\")
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<\/a><\/figure><\/div>\n\n\n\nHow high might they go in 2021?<\/strong><\/h4>\n\n\n\n