The year 2023 saw mortgage rates hit 8% as spreads reached cycle highs. Despite initial improvements, a banking crisis caused increased spreads. In 2024, spreads have improved, and forecasts for 2025 suggest a return to more normal levels. If spreads had remained at 2023 levels, current mortgage rates would be considerably higher, indicating a significant benefit from recent trends. Historical data shows spreads between 1.60% and 1.80%. Should spreads normalize, mortgage rates could decrease significantly. Current forecasts range expectations for mortgage rates between 5.75% and 7.25%.
In 2023, mortgage rates reached 8% and spreads hit new cycle highs, but indicators suggest improvement in 2024 and further optimism for 2025.
Despite a challenging beginning of 2023, spreads have begun to improve in 2024, indicating a positive trend for mortgage rates and the housing market.
Historically, mortgage spreads range from 1.60% to 1.80%, and a return to normal would lower mortgage rates by 0.49%-0.69% from today's levels.
Current forecasts suggest mortgage rates between 5.75% and 7.25%, indicating a cautious optimism as spreads improve despite fluctuations in the 10-year yield.
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