Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
How Central Banks Influence Mortgage Rates Beyond the Policy Rate
Episode 29 of Monetary Policy Explained uncovers the less visible channel through which central banks shape mortgage rates: the term premium on long-term bonds. Lucas and Luna dissect how the Fed's quantitative easing in 2020 compressed the thirty-year mortgage rate by an estimated 1.2 percentage points beyond what the federal funds rate alone would suggest, using data from the Atlanta Fed's term premium model. They then explore why the recent QT unwind has not symmetrically raised mortgage spreads, and what that means for housing markets in mid-2026. A concrete, number-driven look…
The skinny
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