Mortgage Rates Update: August 14th, 2025
- Bill Knudson
- 2 days ago
- 1 min read
This week’s mortgage market offered a modest improvement for borrowers, but the underlying data show lenders are maintaining a substantial risk premium. Economist Bill Knudson emphasizes that while rates have eased, spreads remain well above historical norms, reflecting ongoing caution in the credit markets.
For a $100,000 loan at 6.58%, the monthly payment decreased by $3 is $637.
Upcoming releases:
The next new jobs report is Sept 5
The next CPI release is Sept 11.
The next Fed meeting is Sept 17
Key Takeaways:
Rates Edge Lower:
30-year fixed mortgage rate declined 5 basis points (bp) to 6.58%.
On a $100,000 loan, the monthly payment fell $3 to $637.
Affordability Snapshot at 6.58%:
Interest portion: $384/month (60% of payment)
Amortization: $89/month
Income needed to qualify: $27,315
Income multiplier: 3.7x
Spread Trends:
10-Year Treasury yield rose 6bp to 4.29%.
Mortgage–Treasury spread widened by 5bp to 229bp.
Spread is 61bp above the long-term average of 168bp, creating a sizable “safety cushion” for lenders.
Knudson notes that mortgage rates have fallen more than Treasury yields over the past year, but the persistently high spread underscores lender conservatism. For borrowers, this means modest savings now, but a reminder that market stability—and potentially lower spreads—will depend on sustained economic and inflation improvements.