[adam_arthur]

Mortgage rates historically track the 10y treasury rate. This is market driven, not Fed driven (outside of QE impact)

10y treasury yields 2% while inflation is 7.5%. Ergo mortgages will almost certainly run to 5-6% within a few months once the market perceives that inflation is not transitory and start selling off the 10y treasury en masse.

We have seen this move already starting. It's why mortgages have run from 3-4% in just two months. But not even close to pricing in inflation.

Mortgages were 5% in 2018 when inflation was significantly lower. We may even get to 6-7% in a shorter period of time

[marvin]

Fascinating. Thanks for the info. I'm in northern Europe (Norway), and very curious how this could spread east of the Atlantic. Historically, our central bank has given everyone the impression that they decide the mortgage rate, but history has shown that foreign rates have much higher impact.

In the previous 20 years, whenever rates have spiked abroad, the central bank has made interventions to prevent domestic rates from going up. But those interest rate spikes have been transistory, so I have no idea how things would play out this time.