Bessent defends bond buybacks as 30-year mortgage rates approach 7.5%

Treasury Secretary Scott Bessent is standing by his strategy to bring down long-term interest rates — even as the 30-year fixed mortgage rate closes in on 7.5% and the 10-year Treasury yield sits near multi-decade highs.

In an October 9 letter to Sen. Elizabeth Warren, Bessent defended his expanded Treasury bond buyback program, rejecting criticism that the interventions have failed to curb rising long-term yields, according to The Street.

The timing of the letter is striking. Freddie Mac's 30-year fixed mortgage average reached 7.40% for the week of October 8 — its highest level in a year — while Mortgage Bankers Association figures cited by The Street put the rate as high as 7.49% to 7.57% in early October. The 10-year Treasury yield, the benchmark that most directly drives mortgage pricing, closed around 5.24% on October 9 after briefly touching even higher levels earlier in the month.

Bessent's plan has two main components. The first is an operational one: the Treasury has doubled its long-dated bond buybacks, running operations of $4 billion to $6 billion in recent rounds through early October, according to The Street. The theory is that buying back existing long-term debt reduces the supply of bonds in the market, which should push prices up and yields — and by extension mortgage rates — down.

The second component is geopolitical. According to FX Street, Bessent anticipates further relief once the war with Iran ends and related inflation pressures ease. That linkage makes the timeline for any meaningful rate relief dependent on factors well outside the Treasury's control.

Critics, including Warren, have questioned whether the buybacks are having any measurable effect given that yields have continued to rise. The debate cuts to a fundamental question about what is actually driving long-term rates: Treasury supply management, or broader forces like persistent inflation expectations and geopolitical uncertainty that bond purchases cannot easily offset.

For prospective homebuyers, the practical consequence is straightforward. A 30-year mortgage near 7.5% on a median-priced home adds hundreds of dollars per month compared with rates from just two years ago, keeping affordability near its worst levels in decades. Whether Bessent's program can move that number meaningfully — and how long it might take — remains an open question as the debate between Treasury officials and their critics continues.

Why it matters — With 30-year mortgage rates near 7.5%, the Treasury's ability — or inability — to bring long-term yields down has direct consequences for anyone trying to buy or refinance a home.

Sources differ on Effectiveness of Treasury bond buybacks in reducing long-term yields: Program is working and further relief is expected once geopolitical pressures ease (fxstreet.com (Bessent's position)) vs Interventions have failed to curb rising long-term yields (thestreet.com (Warren's criticism))

Reported by thestreet.com, fxstreet.com