Mortgage rates hit a new year-to-date low, despite Fed drama

Mortgage rates hit a new low today for 2025, despite President Trump’s attempt to fire Fed Governor Lisa Cook on Monday, which many said would drive up bond yields and mortgage rates this week.

I completely understand that this is a complex and confusing topic. On today’s episode of the HousingWire Daily podcast, I discuss why I believe the bond market and mortgage rates didn’t react much to the news of a president trying to fire a Fed governor. But I don’t think anyone would have the lowest mortgage rates of 2025 on their bingo card this week.

It’s been a crazy headline year between the Fed, President Trump, tariffs, The 10-year yield and mortgage rates. But if you take all the noise out of the equation and you believe, like I do, that Fed policy really drives 65%-75% of where the 10-year yield and mortgage rates can range, than rates this year look about right.

Mortgage rates

Mortgage rates are currently just 0.1 percentage point lower than the previous low, as reported by Mortgage News Daily, which listed rates at 6.51% today. Setting the Fed drama aside for a moment, the real highlight for 2025 is the mortgage spreads, which are behaving as they traditionally do at this point in the economic cycle — they are improving.

Without the improvement in mortgage spreads this year, mortgage rates would not have reached a year-to-date low today, particularly because the 10-year yield is currently at 4.28%. The chart below illustrates this progress.

Now this is using data that we add to our weekly Housing Market Tracker, but it gives you an idea of where rates would be today if the spreads were as bad as they were in 2023 — or if they were back to normal.

From last week’s tracker: “If the spreads were as bad as they were at the peak of 2023, mortgage rates would currently be 0.84% higher. Conversely, if the spreads returned to their normal range, mortgage rates would be 0.46%-0.66% lower than today’s level. Historically, mortgage spreads have ranged between 1.60% and 1.80%.

“The best levels of normal spreads would mean mortgage rates at 5.86% % to 6.06% today, a notable difference.”

Conclusion

I know this might be a confusing headline given all the recent events, but I do my best to explain it in the podcast today. However, next week is the truly big week — the last Jobs Week before the September Fed meeting and the bar is very low for the jobs data to look decent again. So, we shall see where the 10-year yield and mortgage rates are at with all the data next week. For now, mortgage rates are at year-to-date lows again today.