10/18/2023: Mortgage Rates Highest since 2000

30-year fixed is now 8%

According to Mortgage News Daily, average 30-year fixed mortgage rate hit 8% this morning, the highest level since mid-2000. Bond yields also surged today. 10-year Treasury yields for 10-year and 20-years notes are now 4.9% and 5.26% respectively.

Major banks have reported their quarterly earnings since last week. Due to the rising long term rates, their held-to-maturity unrealized losses have been staggering. Bank of America, despite beating their earnings, is sitting on $131.6B of unrealized losses with $188.5B of tangible equity at the end of Q3. It’s interesting how the long-term rate has been trending up. It’s possible the yield curve will become un-inverted not because the Fed cuts overnight rates but because the long-term rates go up. In any case, high rates across durations are causing serious stress in the banking system and making the national deficits worse. But t AFAIK here isn’t really a good solution right now. If we lower the rates, we are risking pushing up the inflation. But holding the interest rates high is super scary and something is gonna break.