Mortgage Rates Settle After Volatile Stretch—But Will It Last?

Mortgage rates recently stabilized following a period of intense volatility, according to Logan Mohtashami from HousingWire. This volatility was primarily driven by trade tensions escalating around President Trump’s Liberation Day announcement on April 2, 2025. Mohtashami noted rates have fluctuated significantly, nearly reaching the low end of his forecasted range for 2025. Last week provided some relief, as the 10-year yield dropped from 4.43% to 4.24%, easing mortgage rates slightly.

Understanding Mortgage Spreads

Mohtashami highlights that mortgage spreads—essentially the gap between mortgage rates and the yields on 10-year Treasury bonds—have remained elevated since the Silicon Valley Bank crisis of 2023. He emphasizes that if spreads returned to the normal historical range (1.60%-1.80%), mortgage rates could potentially decrease by as much as 0.82%. Recent volatility, however, has limited significant declines in rates.

Housing Demand Resilience

Interestingly, Mohtashami observes surprising resilience in purchase application data despite mortgage rates trending higher than the ideal 6% range. Even when rates recently rose from 6.54% to 7.10%, the decline in purchase applications was less than anticipated. He notes that with slightly lower rates this week, upcoming data will be crucial in determining if this resilience persists.

Inventory Levels in Southwest Colorado: Positive Signs

In Southwest Colorado, housing inventory has also demonstrated positive trends, reflecting national growth patterns. Active listings in key markets such as Durango, Cortez, and Pagosa Springs have increased significantly over the past few months, improving from historic lows seen in recent years. Local real estate experts view this rise in inventory as crucial for restoring balance to the regional housing market.

New Listings and Price Adjustments in Southwest Colorado

Similarly, new listings across Southwest Colorado have approached healthier seasonal levels, showing encouraging signs for homebuyers. Additionally, price reductions have become more common, reflecting local homeowners adjusting prices in response to elevated mortgage rates and growing inventory. These developments mirror broader national trends reported by Mohtashami, highlighting adjustments necessary to achieve a stabilized market.

Looking Ahead

Mohtashami underscores the importance of upcoming economic reports on jobs, inflation, and home sales, as these could significantly influence mortgage rates and overall market stability. Analysts remain attentive, aware that unexpected headlines related to the ongoing trade war could swiftly disrupt the current stability.

While recent calm in mortgage rates offers optimism, Mohtashami advises market participants to stay informed and vigilant due to the potential for ongoing volatility influenced by economic data and international events.

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