Mortgage rates drop below 6% following Trump’s MBS announcement

It finally happened today: We got mortgage rates under 6% for a short time. Can we get some traction for that level? Well, one aspect of the mortgage-rate story really improved today; we had a monster day in mortgage spreads, improving overnight to push rates down over 20 basis points without much help from the 10-year. Even though today is jobs Friday and the report was interesting, there hasn’t been much movement in the 10-year yield all day. So what just happened?

Trump impact

Mortgage spreads are now almost back to normal at the start of the year. Typically, mortgage spreads in recent history have been between 1.60% and 1.80%. In 2023, they got as high as 3.10%, but as you can see in the chart below, the spreads were already at 2% before Trump’s announcement about directing the GSEs to buy about $200 billion in MBS, which drove traders to push spreads lower than what we started the week at.

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I talked about the potential impact of Trump’s MBS announcement on a breaking episode of the HousingWire Daily podcast, here.

10-year yield and mortgage rates 

Now, as you can see in the chart below, the 10-year yield and 30-year mortgage rates have danced with each other for decades. And now, it’s a very close slow dance that shows the better spreads, which we all wanted to see happen.

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Mortgage rates getting to 8% in 2023 would not have happened without terrible spreads, but now, for 2026, we have the best backdrop in years for the spreads to act normally for the entire year. If we get any help from the 10-year yield, even just toward 4% now, we have sub-6% rates, which is at the bottom end of my 2025 forecast at 5.75%.

Conclusion

This has been a very crazy but positive start to 2026. Getting mortgage spreads back to normal was going to happen on its own anyway this year, but now that process got a kick ahead of the spring season. This doesn’t mean mortgage rates are going to sub-5%, but it means we can easily stay in the lower end range of the past few years unless the labor data starts to really kick into high gear.