Mortgage Rates Update: June 26th, 2025

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

Upcoming releases:

• The next new jobs report is July 3

  
  

• The next CPI release is July 15

• The next Fed meeting is June 30

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This week’s update from economist Bill Knudson reflects continued softening in mortgage rates, paired with a widening yield spread that underscores ongoing market caution. With his hallmark focus on structure over noise, Knudson translates the week's subtle shifts into signals for forward-looking borrowers and lenders.

Mortgage Rates Update: June 26th, 2025

Key Observations:

• Rate Decrease: The 30-year fixed mortgage rate declined by 4 basis points (bp), from 6.81% to 6.77%. For a $100,000 loan, this translates to a $3 monthly savings—now $650/month.

• Loan Cost Structure at 6.77%:

  • Interest expense: $395/month (61% of payment)

  • Borrower income needed: $27,854

  • Income multiplier: 3.6x

• Spread Expansion:

  • The spread between the 10-Year Treasury (4.26%) and mortgage rate widened to 251bp.

  • This is now 83bp above the historical average of 168bp, indicating a sizable “safety cushion” and lender risk premium.

• Economic Context:

  • CPI edged up to 2.4%

  • Treasury yields fell more sharply than mortgage rates, prompting the spread to widen.

Knudson emphasizes that this decoupling of Treasury and mortgage rate movements suggests lenders are still pricing in long-term uncertainty. For market participants, the widened spread is a key metric to watch as a leading indicator of risk sentiment and borrowing conditions..