[cameldrv]

A variety of market factors set them, but Since 2008 they've been effectively set by the Fed intervening in/manipulating the market. Historically the Federal Reserve intervened to set interest rates by buying short term Treasuries. This doesn't have a direct effect on long term debt though, and the Fed didn't want a greater collapse in housing prices after 2008, so they moved to keep mortgage rates low by directly printing money to buy mortgages. The Fed also moved to buy long-term Treasuries, which pushes others who otherwise would buy Treasuries to buy MBS.

As for the scale of this, in 2008, the Fed owned 0 MBS. Since then, the Fed has printed 1.7 trillion dollars [1] to buy MBS. The total amount of total outstanding mortgage debt on every house in the U.S. is 8.8 trillion [2]. Now that the Fed has stopped doing this, rates are going up.

[1] https://www.federalreserve.gov/monetarypolicy/bsd-overview-2... [2] https://www.marketplace.org/2018/02/13/economy/divided-decad...