Buck Field Inn

The current fear on Wall Street is affecting refinancing rates in a big way.  The two major components that make up your everyday mortgage rate is the yield on the 10-year treasury bond plus the premium that refinancing lenders charge above the yield to make a profit on mortgages.  Well, the 10-year treasury yield is currently at historic lows, so why are refinancing rates at least three-quarters of a percentage point higher than historic mortgage rate lows?

It’s the refinancing lender spread premium, of course.  No doubt, we are facing severe overall economic turmoil today, which is causing widespread fear on Wall Street.  Fear equates to risk for investment purposes.  It is this risk that is increasing refinancing rates up to one percentage point in spread over the historical norms.