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The Knudson File: Will Mortgage Rates Continue To Rise?

Mortgage rates remained at 6.01% for the week ending June 23rd, 2022, while 10 Year US Treasuries DECREASED by19 basis points, thus the spread increased by 19 bps to 292 bps or 124 bps ABOVE the 168-bps average. So, for a $100,000 loan, the monthly payment would be $600 which is equal to $20 a day.

30-Year Mortgage Rates

The historic spread (aka difference) between the 10 Year Treasury and Mortgage rates is 168 bps (indicated by the green line). At the start of 2022 Mortgage rates had increased FASTER than the 10-year Treasury. This past week the 10 Year Treasury DECREASED 19 bps, while Mortgage rates remained constant, thus a 19 bps increase in spread occurred. The spread is currently 124 bps above the historical norm. Given how quickly rates have recently risen, pricing personnel will likely choose to “retain this cushion” to be safe against unexpected rate increases.

Rate VS Spread

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