If you've been watching the Grand Forks market from the sidelines, here's what you need to know heading into summer: this market is not cooling down — it's speeding up.In May 2026, 59 homes
The Main Reason Mortgage Rates Are So High
Dated: June 7 2023
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Many prospective homebuyers are currently concerned about the prevailing mortgage rates. Consequently, if you're contemplating purchasing your first home or selling your existing property to find a better-suited home, you may find yourself pondering these two inquiries:
Why Are Mortgage Rates Elevated?
The 30-year fixed-rate mortgage is primarily influenced by the supply and demand dynamics of mortgage-backed securities (MBS). The demand for MBS helps determine the spread between the 10-Year Treasury Yield and the 30-year fixed mortgage rate. Historically, the average spread between the two has been 1.72%.
As of last Friday morning, the mortgage rate stood at 6.85%. This indicates a spread of 3.2%, which is nearly 1.5% above the norm. If the spread were at its historical average, mortgage rates would be 5.37%.
This substantial deviation from the norm is highly uncommon. The positive aspect is that it implies there is room for improvement in mortgage rates today. So, what is causing this wider spread and the current high mortgage rates? To put it simply: when there is less risk, the demand for MBS is high, resulting in lower mortgage rates. Conversely, if there is greater risk associated with MBS, the demand for them decreases, leading to higher mortgage rates. Currently, the demand for MBS is low, which is why mortgage rates are high.
When Can We Expect Rates to Decrease?
According to Odeta Kushi at First American, as mentioned in a recent blog post, it is reasonable to assume that the spread, and therefore mortgage rates, will decrease in the second half of the year if the Federal Reserve eases its monetary tightening measures and provides investors with greater certainty. However, it is unlikely that the spread will return to its historical average of 170 basis points, as certain risks are expected to persist.
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Josh Steinke
In the dynamic world of real estate in Grand Forks, North Dakota, Josh Steinke stands out as a realtor with a deep connection to the community and a profound understanding of the local property market....
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