Recently, we narrowly avoided a situation where a key level in the bond market could have caused mortgage rates to skyrocket. Despite facing economic, political, and Fed-related challenges, we managed to avoid a crisis for now as the crucial levels held steady.
10-year yield and mortgage rates
My forecast for 2024 included:
- A mortgage rate range of 7.25%-5.75%
- A 10-year yield range of 4.25%-3.21%
As we near the end of the year, we observe that my forecast range for mortgage rates has largely been accurate throughout 2024. Economic conditions continue to influence rates, with good data causing rates to rise and vice versa. Despite recent positive economic indicators, we were fortunate that the 10-year yield did not breach a crucial level that could have led to higher mortgage rates.
Mortgage spreads
In 2024, the story of mortgage spreads has been positive compared to the negative trends seen in 2023. Despite a recent spike in mortgage rates causing a slight deterioration in spreads, the overall impact has been mitigated. Improved spreads have helped keep mortgage rates around the 6% mark this year. Without these favorable spreads, rates would have exceeded 7.50%.
For a detailed analysis of future mortgage rates and housing policies under President-elect Trump, you can listen to the HousingWire Daily podcast.
Purchase application data
Examining purchase application data reveals insights into the mortgage rate ranges that stimulate housing demand. While home sales are not experiencing a crash like in 2022, significant growth is observed when mortgage rates approach 6%. Lower rates earlier this year drove a notable increase in home sales, indicating the sensitivity of demand to interest rates.