Mortgage Rates Update: May 29th, 2025

The concern is we continue to be inching towards 7.00% mortgage rates.

For a $100,000 loan at 6.89%, the monthly payment is $658

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 this week’s Mortgage Rates Update, economist Bill Knudson offers a crisp analysis of current lending conditions, placing recent rate movements in historical and economic context. With a proven track record in interest rate research and financial systems thinking, Knudson decodes the subtle shifts in mortgage pricing and their implications for borrowers and markets.

Mortgage Rates Update: May 29th, 2025

Key Developments:

• Mortgage Rates Tick Up: The average 30-year fixed mortgage rate rose by 3 basis points, from 6.86% to 6.89%, translating to a $2 monthly increase for a $100,000 loan ($658/month).

• Cost Breakdown for a 6.89% Loan:

  • Monthly interest expense: $402

  • Interest as a share of payment: 61%

  • Income needed to qualify: $28,197 (3.5x multiplier)

• Yield Spread Update:

  • The spread between 30-year mortgages and the 10-Year Treasury stands at 246bp—78bp above the long-term average of 168bp.

  • This “safety cushion” indicates lenders remain cautious, though the cushion has been narrowing.

• Contextual Insight: Treasury yields declined even as mortgage rates inched up—suggesting sticky lending costs despite improving inflation signals (CPI at 2.3%).

Knudson emphasizes that while short-term movements may appear modest, they reflect deeper credit market dynamics and risk premiums. He advises borrowers to monitor spreads closely, as they often signal lending conditions more reliably than headline rate changes.