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The Knudson File: Will Treasury Rate Increases Continue to Put Pressure on Mortgage Rates?

10 Year US Treasury rates increased 17 basis points for the week ending June 2nd, 2022.  This will put upward pressure on this coming week’s mortgage rates.  The short-term yield curve remains steep while the longer-term 5+ year yield remains FLAT.

Lending Rates and Borrowing Costs

As I mentioned in my latest article “The Knudson File: Mortgage Rates Decrease By 3 BPS”, Mortgage rates have lowered to 5.29%. With this decrease comes an INCREASE in the 10 Year Treasury rates by 17 bps. This caused the net spread to decrease 20 bps to 69 bps ABOVE the normal spread of 168 bps. Mortgage rates will likely increase due to the change in Treasury rates.

10 Year US Treasury

Daily changes in the US 10 Year Treasury rates are represented by the blue bars while the red line indicates the 14-day cumulative change in rates – A 3 bps decrease. TRADITIONALLY RATES ROCKET UP BUT FEATHER DOWN. For the 10 Year Treasury rates (BLUE BARS), it is unusual to have changes of greater than 0.10 in a single day and 0.20 is VERY unusual.

2022 Recent Yield Curve Changes

Rates rose this past week, particularly for short terms (the red line indicates the current week, and the green is last week). The Yield Curve for short terms is VERY steep while the longer-term (5+) remains virtually flat.

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