U.S. Mortgage Rates Are Near 7% But What’s Keeping Them There?
Peter Schiff is raising questions about the U.S. housing market as 30-year mortgage rates remain around the 7% area.
In a recent discussion, Schiff pointed to government-supported purchases of mortgage-backed securities and argued that they may be putting downward pressure on mortgage rates.
The background is important:
• The Trump administration directed Fannie Mae and Freddie Mac to purchase $200 billion of mortgage-backed securities with the stated goal of reducing borrowing costs.
• Schiff argues that these purchases can help suppress mortgage rates compared with where market rates might otherwise be.
• In September, Schiff said 30-year fixed mortgage rates were around 7.25%, while current mortgage rates remain close to 7%.
The bigger question is about price discovery.
If large-scale purchases create additional demand for mortgage-backed securities, they can put downward pressure on mortgage yields and, consequently, mortgage rates. But the exact impact of those purchases on today's mortgage rate cannot be isolated from other factors such as Treasury yields, inflation expectations, Fed policy and broader bond-market conditions.
So Schiff's argument is best understood as an economic interpretation, not as proof that the $200 billion program is solely responsible for keeping mortgage rates below their previous highs.
The U.S. housing market remains caught between high home prices and borrowing costs that are still elevated compared with the ultra-low-rate era.
The key question: how much of today's mortgage rate is being determined by the market, and how much by policy intervention?
#BinanceWillListHyperliquid(HYPE)
Educational content only. Not financial advice.
Peter Schiff is raising questions about the U.S. housing market as 30-year mortgage rates remain around the 7% area.
In a recent discussion, Schiff pointed to government-supported purchases of mortgage-backed securities and argued that they may be putting downward pressure on mortgage rates.
The background is important:
• The Trump administration directed Fannie Mae and Freddie Mac to purchase $200 billion of mortgage-backed securities with the stated goal of reducing borrowing costs.
• Schiff argues that these purchases can help suppress mortgage rates compared with where market rates might otherwise be.
• In September, Schiff said 30-year fixed mortgage rates were around 7.25%, while current mortgage rates remain close to 7%.
The bigger question is about price discovery.
If large-scale purchases create additional demand for mortgage-backed securities, they can put downward pressure on mortgage yields and, consequently, mortgage rates. But the exact impact of those purchases on today's mortgage rate cannot be isolated from other factors such as Treasury yields, inflation expectations, Fed policy and broader bond-market conditions.
So Schiff's argument is best understood as an economic interpretation, not as proof that the $200 billion program is solely responsible for keeping mortgage rates below their previous highs.
The U.S. housing market remains caught between high home prices and borrowing costs that are still elevated compared with the ultra-low-rate era.
The key question: how much of today's mortgage rate is being determined by the market, and how much by policy intervention?
#BinanceWillListHyperliquid(HYPE)
Educational content only. Not financial advice.