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There are other factors influencing Treasury yields, too.<\/p>\n
For example, the Fed has been reducing its holdings of Treasury bonds and mortgage securities via its quantitative tightening policy, while Chinese investors have “turned more circumspect” in their buying of Treasurys and Japanese investors are less interested as they can now get a return on their own bonds, Zandi said.<\/p>\n
Mortgage rates “probably won’t fall below 6% until 2026, assuming everything goes as expected,” said Joe Seydl, senior markets economist at J.P. Morgan Private Bank.<\/p>\n<\/div>\n
The mortgage premium is historically high<\/h2>\n
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Grace Cary | Moment | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
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Lenders typically price mortgages at a premium over 10-year Treasury yields.<\/p>\n
That premium, also known as a “spread,” was about 1.7 percentage points from 1990 to 2019, on average, Seydl said.<\/p>\n
The current spread is about 2.4 percentage points \u2014 roughly 0.7 points higher than the historical average.<\/p>\n
There are a few reasons for the higher spread: For example, market volatility had made lenders more conservative in their mortgage underwriting, and that conservatism was exacerbated by the regional banking “shock” in 2023<\/a>, which caused a “severe tightening of lending standards,” Seydl said.<\/p>\n
“All told, 2025 is likely to be another year where housing affordability remains severely challenged,” he said.<\/p>\n
That higher premium is “exacerbating the housing affordability challenge” for consumers, Seydl said.<\/p>\n
The typical homebuyer paid<\/a> $406,100 for an existing home in November, up 5% from $387,800 a year earlier, according to the National Association of Realtors.<\/p>\n<\/div>\n
What can consumers do?<\/h2>\n
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In the current housing and mortgage market, financial advisor Baker suggests consumers ask themselves: Is buying a home the right financial move for me right now? Or will I be a renter instead, at least for the foreseeable future?<\/p>\n
Those who want to buy a home should try to put down a “significant” down payment<\/a>, to reduce the size of their mortgage and help it fit more easily in their monthly budget, Baker said.<\/p>\n<\/div>\n
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Don’t subject the savings for a down payment to the whims of the stock market, he said.<\/p>\n
“That’s not something you should gamble with in the market,” he said.<\/p>\n
Savers can still get a roughly 4% to 5% return from a money market fund, high-yield bank savings account or certificate of deposit, for example.<\/p>\n
Some consumers may also wish to get an adjustable rate mortgage<\/a> instead of a fixed rate mortgage \u2014 an approach that may get consumers a better mortgage rate now but could saddle buyers with higher payments later due to fluctuating rates, Baker said.<\/p>\n
“You’re taking a gamble,” Baker said.<\/p>\n
He doesn’t recommend the approach for someone on a fixed income in retirement, for example, since it’s unlikely there’d be room in their budget to accommodate potentially higher monthly payments in the future, he said.<\/p>\n<\/div>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"
The Good Brigade | Digitalvision | Getty Images Mortgage rates have risen in recent months, even as the Federal Reserve has cut interest rates. While those opposing movements may seem counterintuitive, they’re due to market forces that seem unlikely to ease much in the near term, according to economists and other finance experts. That may […]<\/p>\n","protected":false},"author":1,"featured_media":34196,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[8761,199,26337,888,98,2868,29604,6718,6714,232,12716,61,532,5929,3627],"class_list":["post-34195","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-arent","tag-business-news","tag-cfp","tag-fall","tag-heres","tag-housing","tag-lee-baker","tag-mortgage","tag-mortgages","tag-personal-finance","tag-personal-loans","tag-rates","tag-time","tag-treasury-notes","tag-u-s-10-year-treasury"],"_links":{"self":[{"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/posts\/34195","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/comments?post=34195"}],"version-history":[{"count":0,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/posts\/34195\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/media\/34196"}],"wp:attachment":[{"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/media?parent=34195"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/categories?post=34195"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/tags?post=34195"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}

The mortgage premium is historically high<\/h2>\n\n\n\nGrace Cary | Moment | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

What can consumers do?<\/h2>\n\nIn the current housing and mortgage market, financial advisor Baker suggests consumers ask themselves: Is buying a home the right financial move for me right now? Or will I be a renter instead, at least for the foreseeable future?<\/p>\n