For the Week Ending 12/1/22 Mortgage Rates Decreased 9bp to 6.72%

For a $100,000 loan the monthly payment DECREASED $6 to $646/mo or $.20/day.

Lending Rates and Borrowing Cost

While mortgage rates DECREASED 9bp, 10 Year Treasury rates DECREASED 18bp. The net difference is a 3bp increase in a spread of 319bp. With the historical spread being 168 there now exists a “safety cushion” of 151bp above the historical spread.

The historic spread between the 10 Year Treasury and mortgage rates is 168pb (see green line, right axis) and currently there is an 151bp above historical norm. For this spread to return to the historical norm, either mortgage rates will decrease further or 10 Year Treasury rates will increase.

10 Year US Treasury

Daily changes in the US 10 Year Treasury rates are the blue bars while the red line is the 14 day cumulative change in rates: <1bp> cumulative DECREASE. For the blue bars it is unusual to have changes of greater than 0.10 in a single day and 0.20 is VERY unusual. 30bp is beyond rare.

Red line is most current rates while the green line is one week ago.

Rates for all terms decreased this week with 5 and 10 year terms decreasing by ~19bp. This increased the yield curve’s inversion. The Yield Curve for middle terms decreased and the longer term (5+ years) remain INVERTED.

Bill Knudson, Research Analyst Landco ARESC