NEW YORK–A primary driver pushing up mortgage rates over the past two years is now playing a role in helping to pull them down, according to a new analysis.
As CUToday.info has reported, and as every credit union mortgage lender is aware, average 30-year fixed mortgage rates have been higher than usual relative to the benchmark Treasury yields they typically track.
“But that extra differential, or spread, has been shrinking for eight straight weeks. It is now at its lowest since March,” noted the Wall Street Journal in its analysis. “The 30-year mortgage rate has fallen by more than a percentage point recently to 6.62%, according to data released (last week by) Freddie Mac. The shrinking spread between that and the 10-year Treasury yield amounts to roughly one-sixth of the decline. Treasury yields have also fallen sharply.”
The Journal pointed out the spread is still far larger than its historical average, but its “downward trend is giving mortgage rates an extra push lower,” the report added.
“It is a boon to would-be home buyers who have been sidelined by high borrowing costs, as well as to hard-up mortgage lenders and real-estate agents,” the Journal said.
A Forecast for 2024
As CUToday.info has also been reporting, the Federal Reserve sent signals following its December meeting that it is likely finished raising rates and—if the economy remains strong and inflation continues to decline—could cut rates as many as three times in 2024. That is reviving investor demand for mortgages somewhat and pushing down the spread, the Journal noted.
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