WASHINGTON — Mortgage rates remain stubbornly high even after the U.S. Treasury announced a major expansion of its long-term bond-buyback program, underscoring how difficult it may be for Washington to push down borrowing costs while inflation and federal deficits continue pressuring the bond market.
The Treasury said it will at least double the size of its liquidity-support purchases of longer-dated government bonds, increasing the maximum from $2 billion to at least $4 billion per operation.
The expanded purchases begin September 9 and will run through November 4.
That distinction matters.
The program itself has not yet started, meaning it is too early to say the buyback effort has failed.
What has happened is that the announcement has so far failed to produce a lasting decline in borrowing costs.
Long-term Treasury yields initially fell after the announcement, giving mortgage markets some relief. But much of that move quickly faded as investors returned their attention to inflation, government borrowing and the massive supply of Treasury debt.
Mortgage rates closely follow the bond market, particularly yields on longer-term government securities and mortgage-backed securities.
That means Treasury can improve liquidity by buying older bonds, but it cannot simply order mortgage rates lower.
HousingWire reported this week that 30-year conforming mortgage rates had reached 6.92%, while jumbo rates climbed to 7.14%.
Other national rate surveys showed somewhat lower averages, illustrating how mortgage-rate estimates vary depending on the lenders, borrowers and methodology being tracked.
Mortgage News Daily, for example, showed its 30-year jumbo index at about 6.88% Tuesday, while another national survey placed conventional 30-year borrowing closer to the upper-6% range.
The broader message is the same: financing a home remains expensive.
Treasury’s buyback program is designed primarily to improve liquidity in older, less-traded government securities and help stabilize parts of the long-term bond market.
It is not a direct mortgage-rate program.
And the size of the intervention remains relatively small compared with the tens of trillions of dollars in outstanding Treasury debt.
That is why economists and bond investors remain focused on the larger forces driving rates — inflation expectations, federal deficits, Treasury issuance and investor demand.
For homebuyers, the practical takeaway is that meaningful mortgage relief may require more than Treasury buybacks alone.
If long-term Treasury yields stay elevated, mortgage rates are likely to remain elevated as well.
The September 9 launch will therefore become the real test.
If larger Treasury purchases succeed in improving demand and keeping long-term yields down, mortgage borrowers could eventually benefit.
If inflation and fiscal concerns continue overwhelming the effect of those purchases, homeowners and buyers may be waiting longer for meaningful relief.
JBizNews Desk | Washington
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