Morgan Stanley: Why Rate Cuts Will Not Fix The Record Housing Unaffordability Problem

By James Egan, chief Morgan Stanley US Housing Strategist and Co-Head of Securitized Products Strategy

The Fed, Mortgage Rates, and the Housing Market

The US housing market has an affordability problem. The nature of the 30-year mortgage has turned that affordability problem into a supply problem. How bad is it? The average mortgage rate on the outstanding universe is just 4.1%, while the market rate today is close to 6.5%.