U.S. mortgage rates are expected to remain higher than previously forecast and decline only modestly over the next two quarters, limiting the prospects for a housing recovery and keeping home-price growth subdued through next year. A Reuters poll of housing experts conducted from August 28 to September 14 put the average 30-year mortgage rate at 6.60% and 6.52% over the next two quarters, up from June forecasts of 6.30% and 6.24%. Annual averages were projected at about 6.40% this year and next. The 30-year rate, which underpins most U.S. home loans, has risen nearly 70 basis points to about 6.85% since the U.S.-Israeli war with Iran began in late February, tracking the 10-year Treasury yield as it crossed 5% on Monday. Total U.S. public debt reached a record $40 trillion last month. Analysts say long-term borrowing costs are being driven increasingly by federal borrowing needs, inflation expectations and term premium, the extra compensation investors demand to hold long-term debt, rather than solely by Federal Reserve policy. The Fed was expected to raise its federal funds rate by 25 basis points this week to a 3.75%-4.00% range, while futures priced nearly three rate hikes by the end of March. Home-price growth, measured by the S&P Cotality Case-Shiller 20-City Index, was forecast at 1.5% this year and 2.3% in 2027, while existing-home sales were expected to remain far below early-2021 levels. Affordability has deteriorated as prices rose about 60% above pre-pandemic levels and outpaced income growth. The outlook also tests whether the 21st Century ROAD to Housing Act can increase construction and affordable-home supply after President Donald Trump spurned it in June, despite its passage through Congress in a rare bipartisan agreement.