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Brian Chappatta

Mortgage Rates Hit the 3% Wall. So Now What?

In this unusual downturn, don’t count on the housing market to conform to past trends.

Demand is high for housing and refinancing.

Demand is high for housing and refinancing.

Photographer: David Paul Morris/Bloomberg

Two months ago, I wrote a column with the headline “Don’t Expect Mortgage Rates to Drop Much More.” At the time, the average for a 30-year fixed loan was near its record low of 3.23% but still much higher than what might be expected, given the going yield of 0.7% on benchmark 10-year U.S. Treasuries.

Even as mortgage rates continued to slide in the following weeks, to 3.15%, then 3.13%, I was confident that my thesis would hold up and the spread between the two rates would remain historically wide. After all, the 10-year Treasury yield had dropped by eight basis points during that time as well.