For the week ending 6.8.23 Mortgage rates decreased 8bp to 6.94%. Since the middle of March, mortgage rates had been in a tight range between 6.50% to 6.65%. SVB bank went under March 10. For a $100,000 loan the monthly payment decreased $5 to $661/mo or $0.18/day.
Mortgage rates decreased 8bp and 10 Year Treasury rates increased 12bp for the week ended 6/8/23. The net difference resulted in a decrease of 20bp in the spread to 321bp. With the historical spread being 168, there now exists a “safety cushion” of 153bp 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 a 173bp above the historical norm which is within 28bp of the record high of 11/10/22. After that date, mortgage rates declined 80bp, for this spread to return to the historical norm, either mortgage rates will decrease or the 10 Year Treasury will increase.
Bill Knudson, Research Analyst LANDCO ARESC