Mortgage Rates Increase to 5.75% – Where is The Tread Headed?

Mortgage rates INCREASE 42 bps to 5.75% for the week ending August 25th, 2022. For a $100,000 loan, the monthly payment INCREASED $26 to $584/mo. or $0.88/day.

30-Year Mortgage Rates

While mortgage rates INCREASED by 42 bps, 10 Year Treasury rates INCREASED by 16 bps. The net difference is a 27-bps increase in a spread of 272 bps. With the historical spread being 168 there now exists a “safety cushion” of 104bp above this historical spread.

Lending Rates and Borrowing Costs

The historic spread between the 10 Year Treasury and mortgage rates is 168 bps (see the green line, right axis) and currently, there are 104 bps above the historical norm. For this spread to return to the historical norm, either mortgage rates will decrease, or 10 Year Treasury rates will increase.

Green Line – Historical Spread

Bill Knudson, Research Analyst Landco ARESC