Lower Mortgage Spreads = Lower Loan Rates
The gap between 10-year treasury yields and mortgage rates, aka the mortgage spread, has dropped to its lowest in over three years. This is good news for home buyers, as a lower mortgage spread translates into lower mortgage rates.
Last week, the spread moved down by 2.26 percentage points. This is lower than the 2.5 spread at the beginning of summer, and 2.68 points in August 2024.
Other factors, such as the Federal Reserve rate cuts that are expected to be announced next month, may bring down mortgage interest rates even more.1
More Signs of a Buyer's Market
NAR's latest housing report had more good news for buyers, which means that the trend towards a buyer's market isn't slowing down.
Home sales rose 2% from June to July 2025 as inventory and options for buyers continued to increase. The rising property prices that discouraged many buyers in previous years are cooling as well, with median prices up just 0.2% from a year ago.
However, this doesn't mean that sellers will suffer. NAR's report described a cumulative 49% home price appreciation for a typical homeowner from July 2019 to July 2025. The average homeowner's wealth has also increased by over $140,000.2
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August Demand for Home Financing Frozen
Even though there are signs of market improvement ahead, the last two weeks have seen little change in mortgage demand. According to the Mortgage Bankers Association's seasonally adjusted index, total mortgage application volume fell 0.5% last week when compared with the previous week.
The average contract interest rate for a 30-year, fixed-rate mortgage with a conforming balance of $806,500 or less increased from 6.68% to 6.69%. Points paid remained at 0.60 (including origination fees) for 80% LTV loans.
MBA economist Joel Kan remarked:
"Prospective buyers appear to be less sensitive to rates at these levels and are more active, bolstered by more inventory and cooling home-price growth in many parts of the country."4
Redditors Share Their Success Stories
Recently, one agent asked others if their decision to enter real estate had changed their life. He received plenty of answers, including these:
- From living in her car at age 21, a 31-year-old agent began her real estate career by door-knocking. She sold $38 million during her first year and estimated that she's knocked on over 35,000 doors during her career.
- A California beekeeper taking home $50,000 a year decided to expand his business into Washington. His bee business failed, so he decided to get a real estate license "for fun". After three years, he was earning around $150,000 a year while retaining his bargain-priced ($650 a month) apartment.
- A Minnesota agent decided to get her real estate license after some disappointing property viewings. Three months later, her marriage ended, so she decided that she had to make real estate work so she could support her children. 23 years later, she owns several businesses with her second husband.
Sources: 1redfin.com, 2nar.realtor, 3socialmediatoday.com, 4cnbc.com, 5reddit.com
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