"The unsung hero of the housing market in 2025 has been the improvement in mortgage spreads, because without the spreads improving as much as they have, mortgage rates would not have gotten near 6% this year. I forecast that mortgage spreads should improve by 0.27%-0.41% this year, from a 2.54% average in 2024, giving mortgage rates a better chance to move down toward the bottom end of my mortgage-rate forecast."
"Now that we've reached my optimal improvement for mortgage spreads in 2025, I want to remind everyone that we are still not back to normal: we still have some room to move lower over time. Historically, mortgage spreads have ranged between 1.60% and 1.80%. If today's spreads were as bad as they were at the peak of 2023, mortgage rates would be 0.98% higher."
Improved mortgage spreads in 2025 reduced mortgage rates to near 6%, providing support to the housing market amid stable inventory and purchase application growth. Mortgage spreads improved by 0.42% in 2025 from a 2024 average of 2.54%, exceeding the forecasted 0.27%–0.41% improvement. Historical mortgage spreads typically ranged 1.60%–1.80%, implying further room for decline and potential mortgage rates between about 5.76% and 5.96% if spreads normalize. Weekly data showed volatility from holidays and AWS outages, but the overall trend is positive. Forecast ranges include mortgage rates 5.75%–7.25% and 10-year yields 3.80%–4.70%.
Read at www.housingwire.com
Unable to calculate read time
Collection
[
|
...
]