Source: US News —
LOS ANGELES (AP) — Economists are baffled by a wider-than-usual divergence between long-term mortgage rates and the yield on the benchmark U.S. government bond that is driving a sharp rise in borrowing costs and helping to torpedo the U.S. housing market this year.
The gap, or spread, between the 10-year Treasury yield and the average rate on a 30-year mortgage widened this year as inflation hit the highest level in decades and the Fed began raising interest rates and taking other steps aimed at taming surging prices.
“The spread between the 10-year Treasury and the mortgage rate is exceptionally wide, abnormal,” Lawrence Yun, chief economist for the National Association of Realtors said last week. “If we had a narrowing, or say, a normal spread condition, today’s mortgage rate could be 5.7%.”