Morgan Stanley Expects 10-Year Note Rate to Increase by 40%

Lock in long-term rates now.

Morgan Stanley is telling you what is going to happen.

Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The surge will also push interest rates on 30-year fixed mortgages to 7.5 percent to 8 percent, almost the highest in a decade, Greenlaw said.

My guess is the 30-year mortgage rate will climb even higher by the end of 2010.