Tracking the weekly 30-year mortgage rates reveals that mortgage spreads have improved significantly since the peak levels of 2023. Improvements in mortgage spreads in 2025 have supported housing demand, which would have been negatively impacted without these changes. Current rates indicate a 0.27%-0.41% improvement from an average of 2.54% in 2024 to 2.34%. If spreads were as high as in 2023, rates would be approximately 0.77% higher, underscoring the importance of current spread levels compared to historical norms.
Every weekend, I track the spreads using the weekly 30-year mortgage rates. The spreads can be a different number, depending on who you quote for the 30-year fixed, since it's the difference between the 30-year fixed and the 10-year yield.
The improvement in mortgage spreads in 2025 has been a blessing for housing, as demand would have been worse if mortgage spreads hadn't improved since the worst levels of 2023.
Conversely, if the spreads returned to their normal range, mortgage rates would be 0.53%-0.73% lower than today's level.
Historically, mortgage spreads have ranged between 1.60% and 1.80%. The best levels of normal spreads would mean mortgage rates at 5.90%-6.10% today, a notable difference.
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