Dan Greenwald 🇺🇦

Assistant Professor at @NYUStern researching links between finance and the macroeconomy.

[Dan Greenwald 🇺🇦 @ProfGreenwald]

TL;DR: mortgages are like long term bonds, but with rates around 1.5pp to 2pp higher due to additional costs and risks, which continues to be right on the money today. Even though short term interest rates have fallen, long term interest rates have not, so neither have mortgage rates.

[Dan Greenwald 🇺🇦 @ProfGreenwald]

Sure, I can explain this.

Let’s start with a recap of the facts: current mortgage rates are 6.09% (Freddie Mac average), compared to current 3mo treasury rates of 3.68%. This is indeed a large difference of around 2.4pp. Further, as the OP notes, the mortgage rate has not fallen much since 2024 even though 3mo treasury rates have fallen by almost 2pp (see graph).

1/5

[barney @barneyxbt]

Explain to me like I'm 5 years old how rates are 3.5%, but mortgage rates are still at 7%.

[Dan Greenwald 🇺🇦 @ProfGreenwald]

Last, why are mortgages so much more expensive than treasury bonds in the first place?

The difference takes into account a) the costs of creating and collecting payments on the mortgage, b) the cost of insuring the mortgage against default, c) prepayment risk (the fact that borrowers tend to refinance when rates are low but keep their cheap loans when rates are high), and d) lender profits.

Historically these have added up to spreads of 1.5pp to 2pp (see graph for historical gaps), so our current 1.8pp is right around average.

4/5

[Dan Greenwald 🇺🇦 @ProfGreenwald]

Adam Solomon and I are seeking a highly skilled and motivated predoctoral research assistant to work with us at NYU Stern. This is a full-time position aimed at candidates interested in an economics or finance PhD. Faculty, please tell your students to apply! Link here:

https://t.co/tYbaGP6GBh

[Urban Economics Association @UrbanEconomics]

Thanks to all who contributed to our successful three-day summer school for PhD students at @TuftsEconomics.

Presentation slides from our six faculty presenters are now available on the UEA webpage: https://t.co/rIuXeo3xbw

[Dan Greenwald 🇺🇦 @ProfGreenwald]

@espenhenriksen So sad to see this -- a fantastic economist gone too soon. I remember this outing fondly.

[Dan Greenwald 🇺🇦 @ProfGreenwald]

9/ If anyone from NYC wants to head to PA on Tuesday, let me know and we can coordinate on the same bus (or even carpool). Let's do this!

[Dan Greenwald 🇺🇦 @ProfGreenwald]

My one and only election post. 

For anyone who cares deeply about the outcome of this election, I urge you to not just vote but VOLUNTEER. It is easy to do, makes a real difference, and is surprisingly fun. If you have never done it before now is the PERFECT time to start. 🧵

[Dan Greenwald 🇺🇦 @ProfGreenwald]

8/ PS. If you can't canvass consider phone banking. It's surprisingly easy: you do it from home on the computer and they automate the dialing. You're just calling likely supporters, and are largely providing key info on where and how to vote, which really helps. Try it out!

[Dan Greenwald 🇺🇦 @ProfGreenwald]

@LevyAntoine There is a 10% fee on profits :). But the sum has gone above 120 in some markets before and then yes, it's free money.

[NBER @nberpubs]

Banks facing losses on their securities portfolios cut lending to firms, but mainly when those losses tighten their capital requirements, from @ProfGreenwald, John Krainer, and @pascalpaul https://t.co/05qMNZzRkO

[Hanno Lustig @HannoLustig]

Wealth inequality increases when r declines👇

https://t.co/XPagxAmNw2