Why are mortgage rates so high when the Fed Funds Rate is at 1%? It is partly greed, banks got burned by bad loans and are now charging a steep price to pay for the their mistakes. Simple answer would be supply and demand. The fewer investors willing to buy MBS (mortgage backed securities) the higher the rate of return. In times such as these, when investors are worried about people paying off the mortgages underlying the MBS, the reward is greater, hence, the 30 year conventional mortgage rate is around 6 1/4% and the jumbo rate is around 7. Translate that to real estate- lower rates allow buyers to buy more expensive houses. So will lower rates push buyers to the table?