Feds Raise Rates to 6.01% – Will This Help Control Inflation?

Mortgage rates increased 55 basis points while 10 Year US Treasuries INCREASED 24 basis points, thus spread increased by 28 bps to 273 bps or 105 bps ABOVE the 168 bps average. 

30-Year Mortgage Rates

Week Ending June 16, 2022: Mortgage rates increased 55 bps to 6.01% so for a $100,000 loan, the monthly payment increased by $35 to $600 which is equal to $1.16 a day.

Rate VS Spread

The historic spread (aka difference) between the 10 Year Treasury and mortgage rates is 168 bps (see the green line). At the start of 2022 mortgage rates have increased FASTER than the 10-year Treasury. This past week the 10 Year increased 24 bps while Mortgage rates increased 55 bps thus a 31 bps increase in spread occurred and the spread is 105 bps above the historical norm. Given how quickly rates have recently risen, pricing personnel are going to want to “increase this cushion” to be safe against unexpected rate increases.

Bill Knudson, Research Analyst Landco ARESC