Mortgage Rates Update: May 22nd, 2025

For EACH of the past 3 weeks, mortgage rates have increased 5bp while the 10 year US Treasury rate increased 29bp.  This is a 14bp reduction in the spread.    The concern is we could be inching towards 7.00% mortgage rates.

Upcoming releases:

• The next new jobs report is June 6

• The next CPI release is June 11

• The next Fed meeting is June 18

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In his latest economic update, seasoned economist Bill Knudson offers a concise yet insightful overview of mortgage market dynamics as of May 22, 2025. With decades of experience analyzing interest rate trends and macro-financial data, Knudson uses this update to distill complex mortgage data into actionable insights for policymakers, financial professionals, and homeowners alike.

Mortgage Rates Update: May 22th, 2025

Key Highlights:

• Rates Tick Up Slightly: The 30-year fixed mortgage rate increased 5 basis points (bp) over the past week, rising from 6.81% to 6.86%. For a $100,000 loan, this translates to a modest $3 increase in monthly payments—now at $656.

• Borrowing Cost Snapshot:

  • Interest now comprises 61% of monthly payments.

  • The net interest expense is $400/month for a 6.86% loan.

  • The income needed to qualify has risen to $28,111, with a 3.6x income multiplier.

• Rate Spread and Market Cushion:

  • The spread between the 10-year Treasury and 30-year mortgage is 232bp, which is 64bp above the historical average of 168bp.

  • This excess spread acts as a “safety cushion,” though it has been narrowing.

Context Matters: Knudson reminds us that mortgage rates are not just numbers—they reflect layered economic forces, including inflation expectations, Fed policy, and global uncertainty. His framing invites readers to understand borrowing costs in a broader macroeconomic context.

This timely analysis affirms Knudson’s reputation for translating market signals into meaningful economic narratives.