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Market Minute: No relief on horizon for mortgage rates

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Expansionary fiscal policies and financial dynamics imply that there is a low probability of any substantial relief on the horizon for U.S. mortgage rates.

The combination of government borrowing, private sector demand that features leverage across the financial sector and the entry of the large hyperscalers into capital markets to finance the construction of data centers point to increasing competition for scarce capital.

Such competition means higher long-term interest rates in general and elevated mortgage rates above 6% for 30-year fixed-rate products.

Absent a near-term recession or an unexpected re-entry of the Federal Reserve into the market for mortgage-backed securities, there is little to suggest that mortgage rates will move lower next year.

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About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel and the UCLA Anderson School of Management's Board of Directors, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia. In December 2023, Brusuelas and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

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