The yield curve, or difference between short term interest rates compared to long term rates have tightened. This is due to the long term interest rates (10yr/30yr notes) staying fairly stable over the past 6 months, but the short term rates (1yr/2yr notes) have gone up. The increase in short term rates started before the Federal Reserve increased their Fed Funds rate by 1/4% in December. The Fed rate increase has a direct effect on how the banks price their Prime rate, which can immediately increase the interest rates on HELOCs, credit cards, and some 1st position adjustable rates mortgages. The standard 30 year fixed rate mortgage rate correlates with the 10 year note rates. The adjustable mortgage rates are more correlated with 6 month or 1 yr note rates.
If you are in the Los Angeles region, have any questions or real estate sales or financing needs, feel free in contacting:
Ron Henderson GRI, RECS, CIAS
Multi Real Estate Services, Inc
Gov’t Affairs Chair – California Association of Mortgage Professionals
Real Estate market, Mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley