This is a YouTube video titled "What are Mortgage Spreads?! 📈📉" featuring Derek McGowan explaining the concept of mortgage spreads, their impact on mortgage rates, and recent market trends as of February 2025.
What are mortgage spreads? Why do they matter? If you care about the monthly payment on your house, this is important. So the 10 year treasury yield, that's the 44 mortgage rate start. The spread is the amount between the 10 year and the actual interest rates delivered to clients. In a normal mortgage market, the spread is that one and a half percent. So for example, the 10 year treasury yields at 4.5% roughly today, 1.5% spread would have interest rates for mortgages at about 6%. They're not because in 2022, 2023, the spread widened. Investors on the mortgage side of the secondary market, they were uncertain, a lot of unpredictable things happening in the market. So they widened the spread to cushion the blow and prepare for what was next. Now they started to shrink that spread, which is a good sign they feel better about the, the, the upcoming mortgage market. So they've shrinked it to about two and a quarter, 2% roughly. That's why mortgage rates are hanging out in the high sixes, around 7% as that spread continues to get better. If it was good today, we'd be around 6% mortgage rates before the market actually improved. So there's a lot more room to get better. I think as the market improves, we'll start to see that.
