The Mortgage Reports

From the Wall Street Journal, this chart shows us that since January 2005, as the 10-year Treasury note has increased its yield, so has the simple, ordinary bank 5-year bank CD.

And, although the 10-year treasury note does not control mortgage rates, over long periods of time they tend to have similar paths.

Therefore, we can make a worthwhile connection:

As mortgage rates trend higher, so does the savings rate offered by banks.

This relationship has impact on two sets of people.

The first set is soon-to-be homebuyers that are nervous about interest rates going up between today and the day they lock their mortgage rate.

If the chart is any indication, that worry can be put to rest because if rates are going up, the money in the bank can offset that rise because it's earning more interest all the while.

The second set is the homeowner that actively manages his mortgage debt and works it into a larger set of financial goals.

For people like this, it may make sense to use 5-year ARMs to get lower interest rates than with a 30-year fixed, but then to purchase an offsetting 60-month CD.

• If rates fall during the 5-year term, remortgage down to the lower rate, increasing the interest rate spread between the mortgage and the CD
• If rates rise during the 5-year term, know that all cash-equivalent securities in the portfolio will be earning higher returns

Advanced mortgage planning like this is not for everyone so make sure to speak with a qualified professional first.

Either way, mortgage rates rising aren't always so bad because it tends to brings the bank accounts up with it.

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Dan Green is an active loan officer. Reach Dan via email at or call toll-free to 877-DAN-GREEN.