Predicting US mortgage interest rates
Hello everyone,
I'm prepping for an interview at a CRE asset management firm and one question I've seen on glassdoor is:
How might you build a data model for predicting US mortgage interest rates?
What are some ideas on this? My first thought is to look at the spread between the 10 year treasury rate and mortgage interest rate but it would require some analysis to project the 10yr treasury rate. Let me know if you guys have any ideas.
You’ll need a crystal ball.
The 10 year Treasury Forward Curve provides a forecast. Chatham has it on their website. Note that forward curves are wildly inaccurate as shown on the hairy curve which shows the inaccuracy of prior forward curve estimates.
That said, I would rely on the forward curve as a predictor of inflation than anything the Federal Reserve has to say about it.
If you can actually predict interest rates, there are easier ways for you to make money than CRE asset management.
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