Macro/US Monetary Policy/Market Detail

Will 30Y mortgage rate fall below 5.75% by June 30, 2026?

activeRate TransmissionResolves: June 30, 2026

The Condition

Fed cuts ≥25bp at March 18, 2026 FOMC meeting

External probability: 5.9%Source: CME FedWatchResolves: March 18, 2026

Our Ensemble Estimates

If condition is true

58%

Model agreement: 82%

Given Fed cuts ≥25bp: Will 30Y mortgage rate fall below 5.75% by June 30, 2026?

If condition is false

30%

Model agreement: 86%

Given Fed holds: Will 30Y mortgage rate fall below 5.75% by June 30, 2026?

Causal Effect

+28pp(positive)

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

Unconditional probability:31.6%(blended: P(Y|T) × 5.9% + P(Y|F) × 94.1%)

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: Freddie Mac PMMS / FRED series MORTGAGE30USDate: June 30, 2026

Source Analysis

Mortgage-10Y spread compression below 175bp signals accelerating mortgage rate declines

Rate TransmissionTRANSMISSION_SPEEDPriority: HIGH

Back to US Monetary Policy