The article discusses the potential for economic recovery in the second quarter, spurred by better weather conditions and clearer trade negotiations. However, it emphasizes the need to watch labor data closely, as any softness could influence forecasts drastically. Current mortgage rates hover at 6.64%, with a challenging environment for reductions. The piece highlights improvements in mortgage spreads and speculates that if they return to normal levels, rates could approach 6%. For 2025, a modest decline in spreads is expected, ultimately affecting mortgage accessibility.
We need to monitor economic indicators, especially labor data, as any signs of weakness will significantly impact the Fed and bond markets' attention.
Currently, mortgage rates are at 6.64% and have faced difficulties breaking below this level, despite potential improvements in the housing market.
If mortgage spreads could return to normal levels, we could see mortgage rates dropping to around 6%, a significant decline from present rates.
The forecast for 2025 anticipates a modest decline in mortgage spreads, projecting rates around 0.27% to 0.41% lower than current average levels.
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