What to watch

Keep your eye on this ball: rates, housing market

Some things, like pitchers and catchers, make a powerful combination. This week, we have a powerful duo to watch: interest rates and housing statistics.

Most people take out mortgages when they buy a house. The rate is a big factor in determining how much house they can buy. At the current average 30-year fixed mortgage rate of 3.59%, a $100,000 loan will cost $454 a month in principal and interest. That’s a pretty swell rate, especially for those who remember 10% mortgages in the 1980s.

But the average mortgage rate — this is from mortgage giant Freddie Mac — has crept up from 3.35% on May 2. That’s because the interest rate on 10-year Treasury securities has been creeping up, too. Tuesday, the 10-year T-note hit a 14-month high of 2.17%.

This week, the Treasury will be auctioning off more debt: 5-year Tnotes today and 7-year T-notes on Thursday. The 2-year auction met with a yawn on Tuesday, drawing fewer bidders than usual, and somewhat higher yields: 0.283%, vs. 0.233% at the March auction.

Rising rates can discourage new mortgage applications, a reliable barometer of economic health. They can also trigger a rush to get loans before rates go up more. We’ll find out how much rates are weighing on the nation’s housing today, when the Mortgage Bankers Association releases its purchase applications index, and again Thursday, when the National Association of Realtors releases its pending home sales index.