These links may be useful in tracking mortgage rate prospects. The first is an article about the relationship of 10 yr Treasury to mortgage rates, the rest are charts.
includes an assumption "As the economy continues to recover in the months to come, ..." which is not really supported by current stats. Otherwise it seems a very good summary.
You may get other current links from this next
10 year rates
20 year rates
You can see the FAMED yield
curve at this chart.
This shows the relationship between long and short term interest rates; the shape of the curve, and its "steepness" is significant to people who know how to read it. (I have to refresh my own understanding.)
The actions of the FED on interest rates affect shortest term rates, and influence longer term rates more weakly. This chart shows the stats for the most recent two days. I suggest you watch what happens on November 4, 5, 6, and 7; if the FED reduces short term rates it should be instructive to see how the curve is affected.
I am guessing, of course, but it looks to me like the curve is quite steep, steeper than usual, at the short term (a convex curve, except for the 3 and 6 month rates). This would be consistent with the FED holding short term rates down to pump money/credit into the economy, until, it hopes, the "recovery" takes hold. If a recovery were to take hold then the curve could "flatten" as near term rates rose.
It would be desirable if long term rates fell further, but they are at recent historical lows, as the charts above show. The likelihood is that long term rates will rise, due to the current budget deficit. There is some indication that they have already begun to do so, in recent days.
When you get a FED inflation panic, and it raises the discount rate, you can get a negative, or concave yield curve, with near term rates higher than long term rates.
If long and short term rates begin to rise in tandem, there is a real credit crunch, and will be hell to pay for a good long time. The next link touches on why.
With household liabilities in excess of 100% of personal income, any increase to interest rates will not just suppress consumption, but will drive up household debt... ie., by increasing the total interest costs to households faster than consumption can be reduced, household debt will increase rapidly if interest rates increase.
With consumption of goods and services held down by high debt and interest payments, one can imagine a situation in which banks will be the only businesses making money - but even that will be true only as long as the indebted households can continue to make payments on their debt. If the banks have to take assets, they will make money that way, unless the assets lose value.
Another key economic indicator is money supply. A rational FED goal is to increase the money supply only as much as the productivity of the economy increases. Money supply has numerous components, ranging from cash, through checking accounts (demand deposits), other "near money" financial instruments such as CD's, etc. It is divided into components, M1 being liquid money, M2 being M1 plus other less liquid monetary instruments - especially savings and time deposits, M3 being M2 plus still less liquid assets... you get the idea.
The invention of new types of financial instruments has made tracking the growth of the money supply difficult, and managing it even more so.
Charts (there are 77):
With the exception of a spike at the begining of 2000 and a tailing
off over the last few months the currency
component of M1 is very smooth.
The condition of demand deposits at commercial banks is another matter
M1 starts looking a bit shakey after 9-11.
checkable deposits shows some anomalous behavior too.
M1 components of M2 seem steady enough.
time deposits jump from $550 b to $700 b between Sept 1999 and Sept
2000. Why? Where did this money come from? Disinvestment
in Stocks, perhaps? A move from stocks to CD's might explain it.
The total M3
money stock chart seems to reflect the flatness of the economy in recent
money funds, climbing sharply until the beginning of 2002, then flatten
and recently begin to slide.
Keogh funds hit their plateau in the first Q of 2001