Mortgage Spreads Keeping Rates Under 7%

Why It Matters

Mortgage spreads are the key near-term governor on borrowing costs: they’re keeping mortgage rates below the psychologically critical 7% threshold and supporting housing demand, but geopolitical shocks and Fed leadership changes could quickly reverse that dynamic.

Summary

Analysts said Wednesday’s hotter inflation print and stabilizing labor market haven’t driven the 10-year yield much higher because mortgage spreads and expected Fed policy remain the dominant forces holding rates down; the 10-year is sitting around 4.45% and mortgage rates are below 7% largely thanks to tighter spreads. Geopolitical conflict and rising oil prices complicate the picture and have actually capped yields by injecting risk-driven demand, even as core and shelter inflation rose. If spreads reverted to the weak 2023 levels, current mortgage pricing would be well above 7%, but improved spreads so far have kept purchase activity and pending-home-sales at healthier levels. Policy moves — including January purchases of agency MBS and the arrival of Fed chair Kevin Warsh — set the stage for renewed debate at the Fed that could shift rates later in the year.

Original Description

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about inflation, mortgage spreads and mortgage rates. The two also discuss what to expect next from the Fed.

Related to this episode:

Inflation is rising, but mortgage spreads have kept rates under 7%

https://www.housingwire.com/articles/inflation-is-rising-but-mortgage-spreads-have-kept-rates-under-7/

HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q

More info about HousingWire

https://lnk.bio/housingwire

To learn more about Total Expert click here.

https://www.totalexpert.com/

The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.