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The Knudson File: Mortgage Rates Decrease By 3 BPS

Mortgage rates decreased 3 basis points for the week ending June 2nd, 2022 while the 10 Year US Treasuries INCREASED 17 bps, thus the spread decreased by 20 bps to 237 bps or 70 bps ABOVE the 168 bps average.  This rise in Treasury rates will place upward pressure on mortgage rates during the upcoming week.

30 Year Mortgage Rates

The decrease from 5.30% to 5.29% equates to a $100,000 loan with a monthly payment of $555 decreasing by $5 which is equal to $0.07 a day.

Rate VS Spread

The historic spread (aka difference) between the 10 Year Treasury and mortgage rates is 168 bps (as indicated by the green line). At the start of 2022 mortgage rates increased FASTER than the 10-year Treasury rates. This past week the 10 Year treasury rates increased 17 bps while Mortgage rates decreased by 3 bps thus a 20 bps decrease in spread occurred. This spread is 70 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.

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