Published in: CU Business
Since the turn of the calendar year, financial markets have experienced significant change. After severe flattening at the end of 2017, swap and treasury securities have sold off in anticipation of a rate hike by the Federal Reserve in March, and potentially two to three more throughout 2018. The 2/10-year treasury spread has rebounded to 61 bps following a decade-long low of 50 bps in early January. As of March 12th, the 2- and 10-year yields sit at 2.26% and 2.87%, respectively. Economic sentiments remain largely optimistic as higher growth and inflationary expectations persist, commonly associated with higher interest rates and steepening yield curves.
The rise in long-end yields has pushed mortgage rates higher. At December month-end, the national average offering rate for a 30-year fixed mortgage was 4.08%; as of March 9th, that rate had increased to 4.41%. Despite the rise in rates,2017 was the strongest year in credit union history for mortgage volume. Over $174 billion in 1st mortgages were granted (originated) in 2017, on the heels of a then-record $172 billion in 2016.