Mortgage spreads
The improvement of the mortgage spreads in 2025 does not seem to get the attention it deserves because I believe that most people are not aware of it. The question could have been seriously suffered if the mortgage spreads were not improved compared to the worst levels of 2023. With extra rate reductions, a Dovish attitude towards FED and less market volatility, we can expect gradual improvements in the spreads over time. This was my way of thinking in 2024 and it continued until this year.
For 2025 I expected an improvement of 0.27% -0.41%, starting with an average of 2.54% in 2024, which had already shown improvement in 2024. Although we have not yet reached that target level, we are now very close.
Last week another example of the reason why better mortgage spreading is important: when the bond returns raised an aggressive move, the spreads became better, which limits the damage to the mortgage interest rate. In 2023 and even in 2024, the mortgage interest rate would not only have been higher to start the week, but they would have gone even higher with rising yields. The next time you see a mortgage spread, say thanks!
If the spreads were as bad as at the height of 2023, the mortgage interest would currently be 0.80% higher. Conversely, if the spreads return to their normal reach, the mortgage interest rate would be 0.50% -0.70% lower than today’s level. Historically, the mortgage spreads varied between 1.60% and 1.80%.
The best levels of normal spreads would mean the mortgage interest rate at 5.88 %% to 6.08%, a remarkable difference.
10-year revenue and mortgage interest
In my forecast of 2025 I expected the following series:
- Mortgage interest between 5.75% and 7.25%
- The return of 10 years fluctuates between 3.80% and 4.70%
To keep it simple about what happened last week, the PPI inflation report was hotter than expected, so that the bond returns increased, and reached 4.30% before the week ended at 4.32%. The mortgage interest started the week at 6.58%, dropped to 6.53%and then returned to where they started with 6.58%.
It has been a long time since people have experienced a noticeable downward trend in mortgage spreads, making it unknown territory to see how resilient mortgage interest rate can be in this phase of the cycle. We do not need sub-4% on the return of 10 years to achieve almost 6% mortgage interest; Just get closer to 4% with an improved spread can now work.
Weekly inventory data
I was shocked that the inventory fell two weeks ago and I was the person who noticed that he stabilized inventory data halfway to the end of June. However, a decrease in stock in the first week of August is still rare; It was more common in the pre-floor era. That said, I expected a pick-up this week and we hardly have anything.
Now the survey growth on an annual basis has risen from 33%to 23%, and this happens without the rates falling almost 6%. Whatever happens to make an inventory of the rest of the year – even if it has its seasonal decline earlier than what we are used to – – the growth in inventory in 2025 is a good thing for housing.
Last week the inventory increased a minimum amount:
- Weekly inventory change (8 August-August 15): Inventory Rose van 859.096 Unpleasant 860,068
- The same week last year (August 9-August): Inventory came from 692.833 Unpleasant 698,161
New frame data
The new data data reached its peak during the week of 23 May, a total of 83,143 entries. Since that time it is really slow down. When I compare 2025 to 2022, we are currently trending under 2022 levels. This week I was also looking for a bouncer here and hardly got anything. Again, we are negative year after year, something I didn’t want to see.
To give you some perspective, during the years of the bubble crash of the house, new entries have been rising between 250,000 and 400,000 a week for many years. Here are the new list data from last week in the past two years:
- 2025: 66,679
- 2024: 67,476
Price percentage
In an average year, about a third of the houses see price reductions, which is a regular part of the housing market. Homeowners often lower their selling prices when the stock levels are rising and the mortgage interest rate remains high. As a result, the percentage of price reductions with more available houses and higher rates is greater than last year.
For my 2025 Price forecastI expected a modest rise in house prices by around 1.77%. This suggests that 2025 will probably see negative real house prices again. In 2024 my prediction of an increase of 2.33% turned out to be inaccurate, especially since the rates fell to around 6% and the question in the second half of the year improved. As a result, house prices increased by 4% in 2024. The rise in price reductions this year compared to last year reinforces my cautious growth grant game
Here are the percentages of houses that have seen the price reductions last week in recent years:
Application -Buy data
Last week the purchase request data showed a growth of 1% from 1% from week to week and a profit of 17% on an annual basis. The increase in new lists on an annual basis can help explain the growth of data on an annual basis for purchase apps. Now that the mortgage interest rate is lower than 6.64%, if they continue to fall, we must see better data from week to week, as we have seen in the past. So far, back-to-back weeks were positive, although the mortgage interest rate had not been much below the level of 6.64%.
Here are the weekly data for 2025:
- 15 Positive lectures
- 11 Negative measurements
- 5 PLAT PRINTS
- 28 Right weeks of positive data on an annual basis
- 15 consecutive weeks of double -digit growth year after year
Total current turnover
The latest total hanging sales data from Housing Wire data offer valuable insights into the current trends in the demand for homes. Last year we observed a significant shift when the mortgage interest rate fell from 6.64% to around 6%. Now that the mortgage interest rate is 6.58%, it will be interesting to see what happens to the data if we can get the rates with duration to 6%.
Total current turnover:
- 2025: 377.582
- 2024: 365,944
Weekly pending sales
Our weekly hanging home sales offers a glimpse of week to week in the data; However, this data line can also be influenced by holidays and any shocks in the short term. Last week we saw a light pick -up; These weekly current contracts usually end up in sales data for 30-60 days.
Weekly pending sales for last week:
- 2025: 67,173
- 2024: 66.638
The coming week: Jackson Hole, Housing Data, Bond Auctions and Voarded speeches
Fed Chairman Jerome Powell will speak on Friday at the annual Kansas City Fed Economic policy symposium In Jackson Hole, Wyoming, making this an important week to observe whether he expressed concern about the recent banengies or retains a focus on inflation.
The week is also filled with releases of housing data, including reliability data of the builder, the start of the houses and the existing home sales. Recently the mortgage interest rate has reached a new year to date, which will not be reflected in this week's reports. However, we could see an increase in the reliability data of builders. In addition, there will be bond auctions and comments from important Federal Reserve officers, who can influence the markets.
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