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No, but lenders demand interest in excess of inflation. Inflation can be transitory, so just because its 7% now doesnt mean a 10 year bond has to be more. And
by refurb 4y ago
No, but lenders demand interest in excess of inflation. Inflation can be transitory, so just because its 7% now doesnt mean a 10 year bond has to be more.
And the mortgage interest rate is set by the bond market, because thats who funds mortgages in the end (see Fannie and Freddie).
- lazide 4y agoFYI, while the Fed was doing QE, they were buying almost all mortgage bonds. That was a core part of the program. It’s in the trillions. So yes, what you’re describing is true - but it has been extremely distorted for a very long time, intentionally. [https://fred.stlouisfed.org/series/WSHOMCB https://fred.stlouisfed.org/series/WSHOMCB] [https://www.cbo.gov/system/files/2022-09/57519-balance-sheet.pdf https://www.cbo.gov/system/files/2022-09/57519-balance-sheet...]