Joint proposal would reduce spread between mortgage rates, Treasury bonds

Washington, D.C. (Oct. 12, 2023)—The Independent Community Bankers of America (ICBA), Community Home Lenders of America, and National Association of REALTORS today proposed a solution to reduce historically high long-term mortgage rates relative to long-term Treasury bonds. The groups’ plan would reduce the historically large spread between 30-year mortgage rates and 10-year Treasuries to promote homeownership affordability.

“With housing accounting for nearly 20% of the nation’s gross domestic product and affecting homeowners and renters nationwide, policymakers must act to promote housing affordability,” ICBA President and CEO Rebeca Romero Rainey said today. “ICBA and the nation’s community banks call on the administration to implement our plan to address lending challenges and mortgage-servicing impediments, which could support demand for mortgage-backed securities and reduce mortgage rates by an estimated 100 to 150 basis points.”

With the combination of high mortgage rates and low housing construction leading to historically unaffordable housing and hampering mortgage lending, the groups issued a joint letter to the White House and Treasury Department urging:

  • The Federal Reserve to maintain its stock of mortgage-backed securities and to suspend further runoff until liquidity and the spread between the 30-year fixed-rate mortgage and 10-year Treasury stabilize.

  • The Treasury Department to amend the Fannie Mae and Freddie Mac Preferred Stock Purchase Agreements to enable the enterprises to temporarily purchase their own and Ginnie Mae’s mortgage-backed securities.

ICBA will continue working with policymakers to help ease nationwide housing affordability challenges to promote affordable housing for American homebuyers.

About ICBA
The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks constitute roughly 99 percent of all banks, employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding nearly $5.9 trillion in assets, over $4.9 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at