Mortgage Rates Update: July 17th, 2025

In this week’s market update, economist Bill Knudson notes a continued but modest uptick in mortgage rates, even as Treasury yields experience more notable increases. The narrowing spread reflects market alignment around inflation expectations and a measured approach by lenders.

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For a $100,000 loan at 6.75%, the monthly payment is $649.

Upcoming releases:

• The next new jobs report is August 1

  
  

• The next CPI release is Aug 12.  Actual July 15 Increases from 2.4% to 2.7% 

• The next Fed meeting is July 30

Mortgage Rates Update: July 17th, 2025

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Key Developments:

• Slight Mortgage Rate Rise: The 30-year fixed mortgage rate rose by 3 basis points (bp), from 6.72% to 6.75%. This brings the monthly payment on a $100,000 loan to $649—up $2 from the prior week.

• Loan Cost Metrics at 6.75%:

  • Interest portion: $394/month (61% of payment)

  • Amortization: $86/month

  • Income required to qualify: $27,797

  • Income multiplier: 3.6x

• Spread Compression Continues:

  • The spread between the 10-Year Treasury (4.47%) and the mortgage rate narrowed to 228bp.

  • While still 60bp above the historical average of 168bp, this “safety cushion” continues to contract—indicating increased lender confidence or more competitive pricing.

• Macro Backdrop:

  • CPI remains at 2.4%

  • Treasury yields rose more sharply than mortgage rates, suggesting bond markets are adjusting to updated inflation and growth outlooks.

Knudson views the gradual narrowing of the mortgage-Treasury spread as a positive sign—markets are stabilizing and lender margins are adjusting in response. For borrowers, this reinforces the importance of acting while spreads remain elevated but trending toward normalization.