The typical 30-year fixed US home loan rate climbed by 19 basis points on Thursday, reaching 7.45%. This increase was captured by Mortgage News Daily in its routine survey of lenders and brokers.
This upward movement mirrors a wider selloff across US government bonds. Yet, for the cryptocurrency sector, the underlying Treasury yield driving this selloff delivers the most significant message.
Treasuries Drag the 30-Year Mortgage Rate Higher
CNBC data shows that the 30-year rate had previously dropped to a low of 5.99% in late February. It started climbing following the outbreak of the Iran war, with the pace picking up after the Federal Reserve implemented a rate hike in September.
Matthew Graham, Chief Operating Officer at Mortgage News Daily, attributed the ongoing increase since September 10 to three primary factors: Federal Reserve statements, rising oil costs, and robust economic indicators.
Even so, Graham noted that there was no distinct trigger for the bond selloff on Thursday afternoon.
“No obvious catalyst. Explanations require concocting narratives and then defending them. There’s no objective, irrefutable way to connect the dots today. Sellers decided to sell… a lot,” he said.
Such selloffs are critical because mortgage rates generally follow longer-term Treasury yields. Department of the Treasury figures show the 10-year yield finished Thursday at 5.18%, moving up from 4.96% on Tuesday.
According to The Kobeissi Letter, inflation is responsible for the bond market downturn. The publication pointed to Brent crude exceeding $105 per barrel alongside peak diesel costs, while also highlighting that consumers anticipate an inflation rate of about 4.6% over the coming year.
Crypto Pays the Price of Higher Yields
The connection to cryptocurrency lies directly within these yields. When government-backed debt offers higher returns, keeping capital in Bitcoin (BTC) involves a greater opportunity cost.
This dynamic was evident on Wednesday, when Bitcoin dropped under $84,000 after solid US business activity figures pushed the 10-year yield past the 5% threshold.
Figures from BeInCrypto Markets indicate that by Friday, BTC was changing hands at $84,590, marking a slight recovery over the prior 24 hours. Alternative coins experienced quicker recoveries, with Solana (SOL) rising 2.2% and XRP (XRP) increasing by 3.4% during the same timeframe.
This situation leaves a lingering uncertainty: will crypto investors maintain their ability to withstand pressure from a Treasury market offering yields above 5%?
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Frequently Asked Questions
What is the current average 30-year fixed US mortgage rate?
The average 30-year fixed US mortgage rate rose to 7.45%, following a 19 basis point increase recorded on Thursday by Mortgage News Daily.
Why are mortgage rates and Treasury yields rising?
The climb is driven by a broader selloff in US government bonds, fueled by factors such as Federal Reserve commentary, higher oil prices, stronger economic data, and persistent inflation concerns.
How do rising Treasury yields affect cryptocurrency?
Higher yields on government debt increase the opportunity cost of holding assets like Bitcoin, putting downward pressure on crypto prices when yields spike.
How has Bitcoin recently performed amid these market conditions?
After dipping below $84,000 earlier in the week, Bitcoin recovered slightly to trade at $84,590 by Friday, while various altcoins like Solana and XRP posted modest gains.
