In 2024, the Federal Reserve lowered its interest rate target three times, prompting hopes for declining mortgage rates. However, experts like Jordan Jackson from J.P. Morgan predict rates will remain around 6.5% to 7%. Mortgage rates are more influenced by long-term government borrowing rates, particularly the rising yield of the 10-year Treasury note, and the Fed’s management of its mortgage-backed securities portfolio, which was aggressively expanded during the pandemic. The ongoing “quantitative tightening” since 2022 may further pressure mortgage rates upward, as reducing asset holdings can increase the spread between mortgage and Treasury yields.
