Understanding How Mortgage Rates Are Affected by the Federal Reserve

[AJ Satcher]

Hello,

I'm doing research into how the federal funds rate affects mortgage rates. I've seen that typically, 30 year fixed mortgages rates will be roughly the federal funds rate +2% (give or take factoring in other economic conditions). 

Looking at April 2022, the Federal Funds effective rate was 0.33% while mortgage rates were about 4.75%. Thats a 4.42% differential! Again, I understand that other economic conditions may play a role in affecting interest rates, but boy is that a large difference. 

Fast forward to today, I see the federal funds rate at 5.33% while the 30 Fixed Rate Mortgages are just above 7%, which is more in line with that funds rate +2% general rule of thumb.

Can anyone explain the main reasons for such large discrepancies, like in April 2022?

Source: 

Mortgage Rates: 30-Year Fixed Rate Mortgage Average in the United States (MORTGAGE30US) | FRED | St. Louis Fed (stlouisfed.org)

Federal Funds Rates: Federal Funds Effective Rate (FEDFUNDS) | FRED | St. Louis Fed (stlouisfed.org)