Mortgage spreads are almost back to normal

Mortgage spreads

In 2023, when mortgage rates reached 8%, the year was hampered by mortgage spreads hitting new cycle highs. Initially, mortgage spreads showed signs of improvement early in the year. However, the Silicon Valley banking crisis caused a spike in spreads and the situation remained challenging throughout the year. 

In 2024, the spreads began to improve, and in 2025, we are now only 0.49% away from returning to normal levels. Looking ahead to the rest of this year and beyond, even as the 10-year yield has increased recently, the damage to mortgage rates appears limited, as spreads continue to improve, especially during times when bond yields rise. This trend is a positive sign that the housing market performs well without sudden rate shocks. 

If the spreads…