Headline: Since the middle of March, mortgage rates have ranged from 6.50% to 6.65%. SVB bank failed on March 10. For this past week, mortgages increased 22bp while Treasuries decreased 22bp, a net increase of 44bp in the spread.
Spreads of mortgage to 10 year Treasuries are 341bp which is 173bp above historical average of 168. The 341bp spread is within 8bp of the record spread that occurred on 11.10.22 and after that date, mortgage rates decreased 80bp. Either mortgage rates will decrease or Treasuries will increase.
The next CPI update is June 13 and it is anticipated that the CPI will decrease from 4.9% to 4.2%. The Fed meets June 14. Other than the monthly jobs report on June 2 (a robust increase of 339,000 net new jobs) there are no major economic data releases scheduled.
For the week ending 6.1.23 Mortgage rates INCREASED 22bp to 7.02%. Since the middle of March, mortgage rates had been in a tight range between 6.50% to 6.65%. SVB Bank went under on March 10.
For a $100,000 loan the monthly payment INCREASED $15 to $ 666/mo or $ 0.49/day.
Mortgage rates INCREASED 22bp while the 10 Year Treasury rates DECREASED 22bp for the week ending 6/1/23. The net difference resulted in a 44bp increase in the spread to 341bp. With the historical spread being 168 there now exists a “safety cushion” of 173bp above the historical spread.
The historic spread between the 10 Year Treasury and mortgage rates is 168bp (see the green line, right axis) and currently is 173bp above the historical norm which is within 8bp of the RECORD high of 11.10.22. After that date, mortgage rates declined 80bp. For this spread to return to the historical norm, either mortgage rates will decrease or 10 Year Treasury rates will increase.
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