Mortgage spreads in 2025 are improving, likely reducing mortgage rates significantly. If spreads had not improved, mortgage rates could be 0.80% higher. Current mortgage spreads indicate rates may lower by 0.50%-0.70% if they return to normal ranges. The anticipated average mortgage spread improvement is expected to reach 0.27%-0.41%. Recent trends show that better mortgage spreads directly support stability in mortgage rates, even when bond yields are rising. For 2025, forecasts predict mortgage rates between 5.75% and 7.25%, with the 10-year yield expected to fluctuate between 3.80% and 4.70%.
The improvement in mortgage spreads in 2025 is crucial, as it limits potential increases in mortgage rates even amidst rising bond yields. Last week demonstrated that better mortgage spreads can substantially reduce the damage to mortgage rates when bond yields fluctuate aggressively.
Predictions for 2025 include mortgage rates between 5.75% and 7.25% and a projected 10-year yield fluctuation between 3.80% and 4.70%. Mortgage spreads have shown improvement from previous years, reflecting gradual recovery in the market.
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