The rally in U.S. Treasurys that pushed 10-year yields down to a level not seen since late 2013 shows the belief that the Federal Reserve will keep rates low in a slowly growing global economy, Bill Gross, chief investment officer at Pimco told MarketWatch.

 “2.50% currently reflects a 0.5% new neutral rate and seems fair for now,” Gross said.

MarketWatch goes on to say, “The new-neutral outlook published by Gross and Pimco adviser Richard Clarida suggests that the global economy is transforming from a period of recovery after the financial crisis…toward stability that is characterized by modest economic growth over the next three-to-five years.”

Despite the Federal Reserve’s near zero interest rate policy, most in the housing industry expected interest rates and therefore mortgage rates would be going up in 2014.

But just last week mortgage rates hit a six-month low of 4.2%.

Job growth continues to disappoint, affordability remains an issue, and sales of almost all single-family home types are weak. Mortgage applications are slow. Wage stagnation remain challenges for both housing and for the economy in general.

Because of this, mortgage bonds in demand, which helps to move mortgage rates lower.