4% 30 Year Mortgage Rates?

From Zillow today: 30-Year Fixed Mortgage Rates Rise to 12-Month Highs; Current Rate is 3.71%

Mortgage rates for 30-year fixed mortgages rose this week, with the current rate borrowers were quoted on Zillow Mortgage Marketplace at 3.71 percent, up from 3.58 percent at this same time last week.

The 30-year fixed mortgage rate hovered between 3.65 and 3.68 percent for the majority of the week before rising to the current rate this morning.

“Rates spiked last week after meeting minutes revealed the Fed was contemplating scaling back economic stimulus plans much earlier than expected,” said Erin Lantz, director of Zillow Mortgage Marketplace. “Now at 12-month highs, we expect rates to remain stable in the near-term, but new direction from the Fed and employment figures could boost rates significantly.”

Here is an update to an old graph - by request - that shows the relationship between the monthly 10 year Treasury Yield and 30 year mortgage rates from the Freddie Mac survey. 

Click on graph for larger image.

Currently the 10 year Treasury yield is 2.135% and 30 year mortgage rates are at 3.71% (according to Zillow). Based on the relationship from the graph, if the ten year yield stays in this range, 30 year mortgage rates might move up to around 4%.

Note: The yellow markers are for the last three years with the ten year yield below 3%. A trend line through the yellow markers only is a little lower, but still close to 4% at the current 10 year Treasury yield.