"Mortgage spreads are now almost back to normal at the start of the year. Typically, mortgage spreads in recent history have been between 1.60% and 1.80%. In 2023, they got as high as 3.10%, but as you can see in the chart below, the spreads were already at 2% before Trump's announcement about directing the GSEs to buy about $200 billion in MBS, which drove traders to push spreads lower than what we started the week at."
"Now, as you can see in the chart below, the 10-year yield and 30-year mortgage rates have danced with each other for decades. And now, it's a very close slow dance that shows the better spreads, which we all wanted to see happen. Mortgage rates getting to 8% in 2023 would not have happened without terrible spreads, but now, for 2026, we have the best backdrop in years for the spreads to act normally for the entire year."
"If we get any help from the 10-year yield, even just toward 4% now, we have sub-6% rates, which is at the bottom end of my 2025 forecast at 5.75%. This has been a very crazy but positive start to 2026. Getting mortgage spreads back to normal was going to happen on its own anyway this year, but now that process got a kick ahead of the spring season."
Mortgage spreads have returned close to historical norms near 1.60–1.80 percent after peaking at 3.10 percent in 2023. A directive for the GSEs to buy roughly $200 billion in MBS pushed spreads lower ahead of the week and accelerated normalization before spring. The 10-year Treasury yield and 30-year mortgage rates remain closely correlated, so improved spreads plus any move of the 10-year toward 4 percent would likely produce sub-6 percent mortgage rates. The bottom end of the prior forecast is 5.75 percent. Rates are unlikely to reach sub-5 percent without notable labor-market weakening.
Read at www.housingwire.com
Unable to calculate read time
Collection
[
|
...
]