By Stephen Gandel
January 3, 2013

FORTUNE — If you are looking to refinance your mortgage, this is close to the best deal you’re going to get. That’s the message from two economists at the New York Federal Reserve.

That contradicts what some have been saying for a while. In fact, observers have been flummoxed about a split between home loans rates and mortgage bonds. While the latter has continued to drop, mortgage rates have been stuck in the mid-3% range. Based on prices for mortgage-backed securities, home loan rates should have hit 2.6% by now.

The two Fed researchers, Andreas Fuster and David Lucca, though, say in a blog post┬áthat their research suggests it’s unlikely mortgage rates will ever get that low. They say there is a possibility that rates may make it down to 3%, but that would require some pretty significant policy changes, and even those changes aren’t guaranteed to produce a 3%, or lower, mortgage rate.

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So why haven’t mortgage rates fallen further? The New York Fed has been trying to figure that out. And Fuster and Lucca’s blog post is based on a conference the NY Fed held last month on the topic. Unfortunately, most of what came out of the conference, and therefore Fuster and Lucca’s recap, is unsatisfying. The economists do a good job of dispelling some myths, namely that increased regulation from Dodd-Frank or the Basel III reforms from international bank regulators are pushing up mortgage rates. Higher capital requirements have depressed the value of mortgage servicing rights, one of the ways banks book profits from home loans, but not enough to cause rates to go up.

Instead, the researchers’ main conclusion is that there are fewer mortgage brokers than there were before the housing bust and financial crisis, and that more competition would bring down rates. But it’s not clear even that is the answer.

The mortgage market has consolidated since the financial crisis. And, like everything else in the banking business, it’s now more than ever in the hands of a few large players. The situation is perhaps more extreme in the mortgage market: Wells Fargo (WFC) and JP Morgan Chase (JPM) collectively do about one out of every two mortgage refis in the U.S.

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Yet, it doesn’t appear that Wells Fargo’s and JPMorgan’s dominance of the mortgage market is driving up rates. I asked the owners of MortgageMarvel, an online mortgage shopping site, to compare rates among banks. What they found is that the average mortgage rate charged by Wells Fargo and JPMorgan wasn’t any higher than other banks. In fact, Wells Fargo’s rate was a little lower than the average community bank. That doesn’t mean that the large banks aren’t influencing the rate in some other way, or having some follow-the-leader role in the marketplace. But I think it makes it hard to come to the conclusion that a lack of competition alone is the reason that rates haven’t fallen more.

For rates to really go down more, Washington would have to get serious about reforming the mortgage market, and replacing Fannie and Freddie with something that lawmakers support, instead of two entities that dominate the market and yet are in a permanent limbo. No one wants them to survive, and no one wants them to die. As a result, a bunch of mortgage finance REITs that have no real incentive to lower rates either have entered the void. If anything, those companies benefit from keeping borrowers in their old overpriced mortgages.

The problem is that the basic plumbing of the mortgage market is broken. More mortgage brokers and lenders won’t solve that. That’s going to take time and probably a better economy. And by that time bond rates will probably have moved up, taking mortgage rates with them.

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