[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"$fxhg8u2htxhlf":3,"$ffeh0925h8cuz":39,"$fbwk2pqjjqsc7":43},{"item":4,"previous":27,"next":33},{"id":5,"slug":6,"title":7,"description":8,"excerpt":9,"contentType":10,"featuredImage":11,"bannerImage":9,"body":12,"agentsBottomLine":13,"bodyImage":14,"isInfographic":15,"categories":16,"isVideo":15,"videoThumbnail":9,"videoSource":9,"publishedAt":25,"updatedAt":26},15273,"the-main-reason-mortgage-rates-are-so-high","The Main Reason Mortgage Rates Are So High","\u003Cp>\u003Cspan style=\"color: rgb(0, 0, 0);\">Today’s mortgage rates are top-of-mind for many homebuyers right now.\u003C\u002Fspan>\u003C\u002Fp>","","blog","https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230606\u002F20230607-the-main-reason-mortgage-rates-are-so-high.jpg","\u003Cp>Today’s mortgage rates are top-of-mind for many \u003Ca href=\"\u002F2023\u002F06\u002F01\u002Fthe-true-value-of-homeownership\u002F\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">homebuyers\u003C\u002Fa> right now. As a result, if you’re thinking about buying for the first time or selling your current house to move into a home that better fits your needs, you may be asking yourself these two questions: \u003C\u002Fp>\u003Col>\u003Cli>Why Are Mortgage Rates So High?\u003C\u002Fli>\u003Cli>When Will Rates Go Back Down?\u003C\u002Fli>\u003C\u002Fol>\u003Cp>Here’s context you need to help answer those questions.\u003C\u002Fp>\u003Ch4>\u003Cstrong>1. Why Are Mortgage Rates So High?\u003C\u002Fstrong> \u003C\u002Fh4>\u003Cp>The 30-year fixed-rate mortgage is largely influenced by the supply and demand for mortgage-backed securities (MBS). According to \u003Ca href=\"https:\u002F\u002Fwww.investopedia.com\u002Fterms\u002Fm\u002Fmbs.asp\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">\u003Cem>Investopedia\u003C\u002Fem>\u003C\u002Fa>: \u003C\u002Fp>\u003Cblockquote>\u003Cem>“Mortgage-backed securities (MBS) are investment products similar to bonds. Each MBS consists of a bundle of home loans and other real estate debt bought from the banks that issued them . . . The investor who buys a mortgage-backed security is essentially lending money to home buyers.”\u003C\u002Fem>\u003C\u002Fblockquote>\u003Cp>Demand for MBS helps determine the spread between the \u003Ca href=\"https:\u002F\u002Fwww.macrotrends.net\u002F2016\u002F10-year-treasury-bond-rate-yield-chart\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">10-Year Treasury Yield\u003C\u002Fa> and the 30-year fixed \u003Ca href=\"https:\u002F\u002Fwww.freddiemac.com\u002Fpmms\u002Fpmms_archives\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">mortgage rate\u003C\u002Fa>. Historically, the average spread between the two is 1.72 (\u003Cem>see chart below\u003C\u002Fem>):\u003C\u002Fp>\u003Cp>\u003Ca href=\"https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230606\u002F20230607-for-50-years-the-30-year-mortgage-rate-has-moved-in-unison-with-the-10-year-treasury-yield.png\" rel=\"noopener noreferrer\" target=\"_blank\">\u003Cimg src=\"https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230606\u002F20230607-for-50-years-the-30-year-mortgage-rate-has-moved-in-unison-with-the-10-year-treasury-yield.png\">\u003C\u002Fa>\u003C\u002Fp>\u003Cp>\u003Cspan style=\"color: rgb(33, 33, 33);\">Last Friday morning, the \u003C\u002Fspan>\u003Ca href=\"https:\u002F\u002Fwww.mortgagenewsdaily.com\u002F\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">mortgage rate\u003C\u002Fa>\u003Cspan style=\"color: rgb(33, 33, 33);\"> was 6.85%. That means the spread was 3.2%, which is almost 1.5% over the norm. If the spread was at its historical average, mortgage rates would be 5.37% (3.65% 10-Year \u003C\u002Fspan>\u003Ca href=\"https:\u002F\u002Fwww.cnbc.com\u002Fquotes\u002FUS10Y\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">Treasury Yield\u003C\u002Fa>\u003Cspan style=\"color: rgb(33, 33, 33);\"> + 1.72 spread).\u003C\u002Fspan>\u003C\u002Fp>\u003Cp>\u003Ca href=\"https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230606\u002F20230607-why-are-mortgage-rates-so-high.png\" rel=\"noopener noreferrer\" target=\"_blank\">\u003Cimg src=\"https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230606\u002F20230607-why-are-mortgage-rates-so-high.png\">\u003C\u002Fa>\u003C\u002Fp>\u003Cp>This large spread is very unusual. As George Ratiu, Chief Economist at \u003Cem>Keeping Current Matters\u003C\u002Fem> (KCM), \u003Ca href=\"https:\u002F\u002Ftwitter.com\u002FGeorgeRatiu\u002Fstatus\u002F1661766282465669124\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">explains\u003C\u002Fa>:\u003C\u002Fp>\u003Cblockquote>“The only times the spread approached or exceeded 300 basis points were during periods of high inflation or economic volatility, like those seen in the early 1980s or the Great Financial Crisis of 2008-09.\"\u003C\u002Fblockquote>\u003Cp>The graph below uses \u003Ca href=\"https:\u002F\u002Ffred.stlouisfed.org\u002F\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">historical data\u003C\u002Fa> to help illustrate this point by showing the few times the spread has increased to 300 basis points or more:\u003C\u002Fp>\u003Cp>\u003Ca href=\"https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230606\u002F20230607-spread-between-the-10-year-treasury-and-the-30-year-fixed-mortgage-rate.png\" rel=\"noopener noreferrer\" target=\"_blank\">\u003Cimg src=\"https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230606\u002F20230607-spread-between-the-10-year-treasury-and-the-30-year-fixed-mortgage-rate.png\">\u003C\u002Fa>\u003C\u002Fp>\u003Cp>The graph shows how the spread has come down after each peak. The good news is, that means there’s room for mortgage rates to improve today.\u003C\u002Fp>\u003Cp>So, what’s causing the larger spread and making mortgage rates so high today?\u003C\u002Fp>\u003Cp>The demand for MBS is heavily influenced by the risks associated with investing in them. Today, that risk is impacted by broader market conditions like \u003Ca href=\"\u002F2023\u002F05\u002F24\u002Fowning-a-home-helps-protect-against-inflation\u002F\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">inflation\u003C\u002Fa> and fear of a potential \u003Ca href=\"\u002F2023\u002F05\u002F02\u002Fa-recession-doesnt-equal-a-housing-crisis-2\u002F\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">recession\u003C\u002Fa>, the Fed’s interest rate hikes to try to bring down \u003Ca href=\"\u002F2023\u002F05\u002F10\u002Fthe-impact-of-inflation-on-mortgage-rates\u002F\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">inflation\u003C\u002Fa>, headlines that create unnecessarily negative narratives about \u003Ca href=\"\u002F2023\u002F06\u002F05\u002Foops-home-prices-didnt-crash-after-all\u002F\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">home prices\u003C\u002Fa>, and more.\u003C\u002Fp>\u003Cp>Simply put: when there’s less risk, demand for MBS is high, so mortgage rates will be lower. On the other hand, if there’s more risk with MBS, demand for MBS will be low, and we’ll see higher mortgage rates as a result. Currently, demand for MBS is low, so mortgage rates are high.\u003C\u002Fp>\u003Ch4>\u003Cstrong>2. When Will Rates Go Back Down?\u003C\u002Fstrong>\u003C\u002Fh4>\u003Cp>Odeta Kushi, Deputy Chief Economist at \u003Cem>First American\u003C\u002Fem>, answers that question in a \u003Ca href=\"https:\u002F\u002Fblog.firstam.com\u002Feconomics\u002Fmind-the-gap-between-mortgage-rates-and-the-10-year-treasury-yield\" rel=\"noopener noreferrer\" target=\"_blank\" style=\"color: rgb(5, 99, 193);\">recent blog\u003C\u002Fa>:\u003C\u002Fp>\u003Cblockquote>\u003Cem>“It’s reasonable to assume that the spread and, therefore, mortgage rates will retreat in the second half of the year if the Fed takes its foot off the monetary tightening pedal and provides investors with more certainty. However, it’s unlikely that the spread will return to its historical average of 170 basis points, as some risks are here to stay.”\u003C\u002Fem>\u003C\u002Fblockquote>","\u003Cp>The spread will shrink when the fear investors feel is eased. That’ll mean we should see mortgage rates moderate as the year goes on. However, when it comes to forecasting mortgage rates, no one can know for sure exactly what will happen.\u003C\u002Fp>","https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230606\u002F20230607-for-50-years-the-30-year-mortgage-rate-has-moved-in-unison-with-the-10-year-treasury-yield.png",false,[17,21],{"id":18,"name":19,"slug":20},5,"For Buyers","buyers",{"id":22,"name":23,"slug":24},35,"Mortgage Rates","mortgage-rates","2023-06-07T10:30:00Z","2023-06-07T10:30:24Z",{"id":28,"slug":29,"title":30,"featuredImage":31,"publishedAt":32,"contentType":10,"isVideo":15},15263,"real-estate-is-still-considered-the-best-long-term-investment-1","Real Estate Is Still Considered the Best Long-Term Investment","https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230605\u002F20230606-real-estate-is-still-considered-the-best-long-term-investment.jpg","2023-06-06T10:30:00Z",{"id":34,"slug":35,"title":36,"featuredImage":37,"publishedAt":38,"contentType":10,"isVideo":15},15274,"this-real-estate-market-is-the-strongest-of-our-lifetime","This Real Estate Market Is the Strongest of Our Lifetime","https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002Fcontent\u002Fimages\u002F20230608\u002F20230608-this-real-estate-market-is-the-strongest-of-our-lifetime.jpg","2023-06-08T10:30:00Z",{"cover":40,"open":41,"shareSpread":42},"https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002FKeepingCurrentMatters\u002Fcontent\u002Fimages\u002F20260603\u002F2026-Summer-Buyers-Guide-Cover-original.png","https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002FKeepingCurrentMatters\u002Fcontent\u002Fimages\u002F20260603\u002F2026-Summer-Buyers-Guide-Spread-original.png","https:\u002F\u002Ffiles.keepingcurrentmatters.com\u002FKeepingCurrentMatters\u002Fcontent\u002Fimages\u002F20260603\u002F2026-Summer-Buyers-Guide-Magazine-original.png",[44,48,49,53,57,61,65,69,73,74,78,82,86,90,94,98,102,106,110,114,118,122,126,130,134,138,142,146,150,154],{"id":45,"name":46,"slug":47},1,"Uncategorized","uncategorized",{"id":18,"name":19,"slug":20},{"id":50,"name":51,"slug":52},6,"For Sellers","sellers",{"id":54,"name":55,"slug":56},7,"Foreclosures","foreclosures",{"id":58,"name":59,"slug":60},8,"Infographics","infographics",{"id":62,"name":63,"slug":64},9,"Home Prices","home-prices",{"id":66,"name":67,"slug":68},11,"First-Time Buyers","first-time-buyers",{"id":70,"name":71,"slug":72},34,"Senior Market","senior-market",{"id":22,"name":23,"slug":24},{"id":75,"name":76,"slug":77},38,"Move-Up","move-up",{"id":79,"name":80,"slug":81},41,"For Sale by Owner","for-sale-by-owner",{"id":83,"name":84,"slug":85},42,"Featured","featured",{"id":87,"name":88,"slug":89},45,"New Construction","new-construction",{"id":91,"name":92,"slug":93},52,"Luxury \u002F Vacation","luxury--vacation",{"id":95,"name":96,"slug":97},53,"Rent vs. Buy","rent-vs-buy",{"id":99,"name":100,"slug":101},80,"Time-sensitive","time-sensitive",{"id":103,"name":104,"slug":105},81,"Outdated","outdated",{"id":107,"name":108,"slug":109},147,"Internal","internal",{"id":111,"name":112,"slug":113},148,"Do Not Autopost","do-not-autopost",{"id":115,"name":116,"slug":117},320,"Inventory","inventory",{"id":119,"name":120,"slug":121},321,"Agent Value","agent-value",{"id":123,"name":124,"slug":125},322,"Affordability","affordability",{"id":127,"name":128,"slug":129},323,"Buying Tips","buying-tips",{"id":131,"name":132,"slug":133},324,"Downsize","downsize",{"id":135,"name":136,"slug":137},325,"Economy","economy",{"id":139,"name":140,"slug":141},326,"Equity","equity",{"id":143,"name":144,"slug":145},327,"Forecasts","forecasts",{"id":147,"name":148,"slug":149},328,"Selling Tips","selling-tips",{"id":151,"name":152,"slug":153},339,"Expired\u002FWithdrawn\u002FCanceled","expiredwithdrawncanceled",{"id":155,"name":156,"slug":157},340,"Price It Right\u002FOverpricing","price-it-rightoverpricing"]