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Will 30Y mortgage rate fall below 5.75% by June 30, 2026?
The Condition
Fed cuts ≥25bp at March 18, 2026 FOMC meeting
Our Ensemble Estimates
Given Fed cuts ≥25bp: Will 30Y mortgage rate fall below 5.75% by June 30, 2026?
Given Fed holds: Will 30Y mortgage rate fall below 5.75% by June 30, 2026?
Causal Effect
A Fed cut is worth ~28 percentage points to the probability of mortgage rates falling below 5.75%, primarily through rate differential compression and spread dynamics
Why This Matters
Tests whether a rate cut accelerates mortgage rate transmission. Current 30Y mortgage is 6.01%. A cut would lower the fed funds rate and compress short-term yields, but the mortgage-10Y spread (193bp) determines how much passes through to borrowers. The housing channel is the most structurally impaired transmission mechanism due to mortgage lock-in effects.
Resolution Criteria
Freddie Mac Primary Mortgage Market Survey (PMMS) weekly average 30-year fixed rate published on or before June 30, 2026 shows a reading below 5.75%
Source Analysis
Mortgage-10Y spread compression below 175bp signals accelerating mortgage rate declines