"Part of the decline can be attributed to a continued gradual compression of the " mortgage spread" -the difference between the 10-year Treasury yield and the average 30-year fixed mortgage rate-as some investors slowly regain their appetite for mortgage-backed securities (MBS) and help fill the void left by the Federal Reserve when it stopped buying MBS in spring 2022. The other factor putting downward pressure on mortgage rates-and long-term yields-has been a recent stretch of softer-than-expected labor market data and financial market's growing expectation that the Fed will shift policy from restrictive to neutral."
""The MBS team [at Bank of America] does see a path to a 5% mortgage rate if the Fed does MBS quantitative easing and yield curve control, driving the 10-year [Treasury yield] down to 3.00%-3.25%," wrote Bank of America analysts in a report published on Tuesday. When Bank of America says "MBS quantitative easing," they mean the Federal Reserve going out and buying mortgage-backed securities-something it has done in recent decades when the economy and"
Average 30-year fixed mortgage rates recently reached a calendar-year low near 6.35%, with daily readings as low as 6.13%. Rates have edged down amid a gradual compression of the mortgage spread as investors slowly regain appetite for mortgage-backed securities (MBS) and help fill the void left when the Federal Reserve stopped buying MBS in spring 2022. Softer-than-expected labor market data and growing market expectations that the Fed will shift policy from restrictive to neutral have also put downward pressure on long-term yields. Bank of America projects an average 30-year rate near 6.25% by end-2025, and sees a path to 5% only with Fed MBS QE and yield-curve control driving the 10-year yield to about 3.00%–3.25%.
Read at Fast Company
Unable to calculate read time
Collection
[
|
...
]