As anyone who’s shopped for a mortgage recently can confirm, high rates are no fun. But in recent weeks, borrowers have caught a break from an unlikely source: investors who buy mortgage bonds.

Wall Street's improving sentiment toward the housing market has pushed the 30-year fixed-rate mortgage to roughly 6.34% in recent weeks. That's down from just below 7% at the start of 2025, even as other economic conditions remain choppy – and suggesting investors are starting to see a sort of equilibrium in the housing market.

Mortgage rates move in the same direction as the 10-year U.S. Treasury note, but at a higher level. The difference between the two is called a spread. Starting in 2022 or so, the spread widened, making mortgages much more expensive, as investors fretted about the ability of the Federal Reserve to control runaway inflation in the aftermath of the pandemic.

To understand what’s going on now, it helps to remember the angst of late 2022 and early 2023, said Jake Krimmel, a senior economist at Realtor.com who previously worked at the Federal Reserve Board in Washington.

As the economy “re-opened” after the COVID shutdowns, inflation surged to a 40-year high. Investors began selling bonds, which pushes prices lower and yields (rates) higher. Meanwhile, economists and other analysts began to fear the worst. Many forecast a recession would hit the U.S. economy in the coming months.

Investors in the mortgage market responded in turn. In October 2022, the 30-year-fixed soared over 7% − more than double the level at which it had started the year.

“The question was, what are higher mortgage rates going to do to the housing market? They’re going to crush the housing market, right? It's going to be a huge recession. You're going to see prices drop by 20%. We're going to have a crash. And that didn't come to pass,” Krimmel told USA TODAY.

In fact, the housing market has essentially done what once seemed unthinkable: absorbed rates of 6-7%, said Dan Richards, president of mortgages for Flyhomes, a fintech company that offers buy-before-you-sell home loans. \\"It hasn't really blown things up,\\" Richards said. \\"Now we're sort of waiting to get back to a reversion to the mean. And I think people in general feel like we are getting there.\\"

To be sure, no one is saying that these higher rates are easy for any individual borrower to manage. Most buyers are having to stretch mightily to get into homes. And it’s also somewhat ironic that spreads have started to signal stasis in the fraught economic conditions of 2025: with tariff levels at the highest in nearly a century, a bifurcated economy of haves and have-nots and a bitterly divisive government shutdown underway.

More: America's housing is pulling further out of reach, report finds

In fact, Krimmel points out that spreads are still higher than they have been over the long run.

As of the first week of October, the spread was 2.19, 0.44 percentage point greater than the 2005-2021 average of 1.75. If the spread settled down to its longer-run average, in other words, borrowers would be able to get a 30-year fixed-rate mortgage for 5.90% instead of 6.34%, which was the national average on Oct. 2.

Read next: The Fed is lowering interest rates. So why are mortgage rates going up?

That extra uncertainty mostly reflects investor concern about the job market, Richards said. Job growth is slowing rapidly even as inflation remains stubbornly higher than the Fed wants. Mortgage investors still don’t know how borrowers will manage an economic downturn in this economy.

For consumers, Krimmel said, the lesson is clear. There's far more complexity in the mortgage market than just what the Federal Reserve might or might not do. \\"You're better off shopping around for lenders than trying to time the market,\\" he said.

This article originally appeared on USA TODAY: Shopping for a mortgage? Lower rates are here thanks to Wall Street