One cause of the recent decline in long-term interest rates: The debt ceiling…

the legal cap on how much the Treasury can borrow. The limit is fast approaching. And although the Treasury can keep raising money beyond the formal Aug. 1 deadline, it’ll have to reduce its borrowing until Congress again raises the cap sometime this fall. That means fewer long-term bonds hitting the market, leaving bond buyers to compete for the existing pool of Treasuries. As they bid up bond prices, yields turn lower. Once Congress ups Washington’s debt limit again, yields should trend up. After limiting its borrowing for weeks or months, the Treasury will sell a flood of bonds and investors will probably demand a moderately higher yield to buy them all.

Look for the yield on the 10-year Treasury note to be near 1.8% by year-end. Kirk’s comment on the above came from Kiplinger’s Letter Aug 14, 2021Long term interest rates in coordination with Mortgage-Backed Securities and other economic indicators drive the housing interest rates.

You can expect housing 30-year mortgage rates to climb to 3.5-3.75% by the end of this year. Assuming the predicted 1.8 yields on 10-year notes becomes reality. Still, buying a home is a great move for most Americans. Tax benefits, family stability, and purchasing equity with every mortgage payment over time will create real wealth for your family.