Bond and mortgage rates will move earlier in anticipation of the Fed’s change in short-term interest rates. They will probably cut short-term interest rates by a quarter of a percent at either their June or July 2024 meeting. Long-term rates are set by bond and securities traders weighing current short-term interest rates and expected long-term rates. If current mortgage rates are high but expected to drop, then prepayments will rise when mortgage rates fall. And right now, short-term interest rates are higher than long-term rates.

Source: Forbes January 15, 2024 04:00 UTC