Headline: Mortgage rates decreased by 10bp and the 10-year Treasury rates increased by 17bp Spreads have now at 300bp. While not a record, the last time spreads were this large was November 2022 and mortgage rates feathered down 100bp over the following 12 weeks.
The Fed's next meeting is 5.2.23. The next jobs numbers release is 4.7.23.
On 4.12.23 the CPI data for March will be released. It is envisioned the annual CPI will decrease from the current 6.0% level to ~5.2% because the March 2022 spike due to Russia's invasion will fall out of the 12-month rolling CPI calc. Between the large spread and a decreasing CPI, a case can be made that mortgage rates may go under the 6.00% level in the next few weeks barring a major change in jobs.
For the week ending 3.30.23 Mortgage rates DECREASED 10bp to 6.55%.
For a $100,000 loan, the monthly payment DECREASED by $7 to $635/mo or $0.22/day
While mortgage rates DECREASED 10bp, 10 Year Treasury rates INCREASED 17bp. The net difference resulted in a decrease of 27bp in the spread to 300bp. With the historical spread being 168 there now exists a “safety cushion” of 132bp above the historical spread.
The historic spread between the 10 Year Treasury and mortgage rates is 168pb (see green line, right axis) and currently, there is a 132bp above the historical norm. For this spread to return to the historical norm, either mortgage rates will decrease further or 10 Year Treasury rates will increase. The last time spreads were this significant, mortgage rates feathered down 100bp over the following 12 weeks.
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