Why I watch the 10-year Treasury every day, and what it will never tell you about your house

I watch the 10-year Treasury to get the true benchmark, not someone’s personal bias that today is always a great day or always a bad day to buy.

1. A widget on my phone. I have no finance background. I keep a stock widget with ^TNX on my phone, so I see it at all times. If something crazy is going on in the world, this number shows it.

2. A foundational stat. The Sharpe ratio measures an investment’s return against a “risk-free” return, and investors use a U.S. Treasury for that number. When a whole field of finance measures itself against the Treasury, I want to know where it sits.

3. Ten years for a 30-year loan. A 30-year mortgage rarely lasts 30 years. People sell, move, or refinance. That is one reason 30-year rates follow the 10-year. My rough rule: add 2% to the 10-year for the average 30-year rate.

4. The money partner’s number. Say you and a partner flip a $600K house, and the partner puts up all $600K. He gets a preferred return at the 10-year plus 2%. At a 5% 10-year, he gets $642K back before you two split the profit 50/50.

5. Captain, not lender. I am the captain of the housing ship: I write the offers and negotiate the deal. I am not a lender, and I do not cross that legal line. But white glove service means the more I know, the better.

6. What do you truly want? The better question about rates is not the cost of money. If the pain where you live now is high enough, the cost of money is small next to your dream life. If you want a rental, buy when no one else can. And if you want a rental so you can drive the guys from the country club past your properties on the way to the club, that is fine. A mortgage rate will not fix that.

The rate gives you certainty. It does not give you the reason.

Know the benchmark, then know your reason. The 10-year gives you accurate information and shows where your quote sits on the spectrum against other banks.

Sources: Charles Schwab, ‘Calculate the Sharpe Ratio to Gauge Risk’; Fannie Mae, ‘What Determines the Rate on a 30-Year Mortgage?’ (Dec. 2024).

You don’t need a house picked out or a plan. If you’re wondering what may or may not be possible for you, email me at nlamkin@c21scheetz.com and let’s talk it through.

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