Mortgage rates increased from 7.17% to 7.28% on 10.27.22
Spread of Mortgage to 10 Year Treasury is now 332bp which is 164bp ABOVE the normal historical spread of 168bp. Either Treasuries will increase or Mortgage rates will decrease in the upcoming week. Fed meets Nov 2.
30 Year Mortgage Rates
Lending Rates and Borrowing Costs
While mortgage rates INCREASED 12bp, 10 Year Treasury rates DECREASED 28bp. The net difference is a 40bp increase in a spread of 332bp. With the historical spread being 168 there now exists a “safety cushion” of 164bp above this historical spread.
Spread
The historic spread between the 10 Year Treasury and mortgage rates is 168pb (see green line, right axis) and currently there is an 164bp above historical norm. For this spread to return to the historical norm, either mortgage rates will decrease or 10 Year Treasury rates will increase.
Upcoming Week
Dates to keep in mind:
Nov 2 – Fed meets, likely to have rate increase 50bp or 75bp
Nov 4 – Monthly net new job numbers
Nov 8 – Mid term election
Nov 10 – CPI data for Oct to be released. Likely to be an improvement in LOWER inflation data. Beginning of good–with more good news to follow over the next few months.
The PSI was DOWN 10.2% for Sept data. That is down 10.2% from the PRIOR month of Aug 2022. 10.2% down in ONE MONTH. High mortgage rates, higher home prices and lack of homes for sale is having a negative impact on home sales.
Key Econ Items in The Upcoming Week That Will Impact Treasury and Mortgage Rates are Highlighted in BLUE
Bill Knudson, Research Analyst Landco ARESC