Mortgage Rates Update: June 12th, 2025

For a $100,000 loan at 6.84%, the monthly payment is $655

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Bill Knudson, a trusted voice in economic analysis, provides a grounded view of mortgage market trends amid a backdrop of cautious optimism. In this week’s update, Knudson unpacks minor rate changes while drawing attention to meaningful underlying signals for borrowers and market watchers.

Mortgage Rates Update: June 12th, 2025

Key Insights:

• Slight Rate Dip:The 30-year fixed mortgage rate edged down 1 basis point (bp) to 6.84%. For a $100,000 loan, the monthly payment decreased by $1, now totaling $655.

• Affordability Breakdown at 6.84%:

  • Monthly net interest cost: $399

  • Interest makes up 61% of the total payment

  • Income needed to qualify: $28,057

  • Income multiplier: 3.6x

• Market Signal — Yield Spread:

  • The spread between the 10-Year Treasury and mortgage rate stands at 248bp

  • This is 80bp above the historical average (168bp), indicating a continued “safety cushion” that reflects credit market caution.

• Contextual Note: Both mortgage and Treasury rates declined slightly, but spreads remain elevated, a pattern that Knudson sees as indicative of persistent lender conservatism despite softening inflation data (CPI at 2.4%).

Knudson encourages close monitoring of spreads, as these risk premiums often tell a more complete story than rate movements alone. The narrowing cushion is worth watching as an early signal of shifting financial confidence.