The Housing Market Correction Takes an Unexpected Turn
Being priced in a recession by financial markets puts downward pressure on mortgage rates.
According to Fortune, while the Fed doesn’t directly set mortgage rates, its policies do impact how financial markets price both the 10-year Treasury yield and mortgage rates. In expectation of a rising Federal Funds rate and monetary tightening, financial markets increase both the 10-year Treasury yield and mortgage rates. In expectation of a reduced Federal Funds rate and monetary easing, financial markets price down both the 10-year Treasury yield and mortgage rates. The latter is what we’re seeing now in financial markets.
