Mortgage Rates Update: September 11th, 2025
- Bill Knudson
- Sep 13
- 1 min read
Mortgage markets offered welcome relief this week as rates declined more sharply than Treasury yields. Economist Bill Knudson notes that while affordability improved modestly, spreads remain above long-term norms, reflecting lingering caution among lenders.
For a $100,000 loan at 6.35%, the monthly payment decreased $10 to $622.
Upcoming releases:
Next new jobs Oct 3 (9.5.25 New jobs 22k, unemployment rose to 4.3%)
Next CPI release is Oct 15 (CPI increased from 2.7% to 2.9%)
Next Fed meeting is Sept 17
Key Developments
Mortgage Rates Fell:
The 30-year fixed mortgage rate dropped 15 basis points (bp) to 6.35%.
On a $100,000 loan, the monthly payment declined $10 to $622.
Affordability Snapshot:
Interest accounts for roughly 60% of payments.
Net interest expense eased further, providing incremental borrower relief.
Spread Movements:
The spread between the 30-year mortgage and the 10-year Treasury narrowed by 1bp to 234bp.
Still, this remains 66bp above the historical average of 168bp, a sign that lenders are maintaining a strong risk buffer.
Market Context:
The 10-year Treasury yield decreased 16bp to 4.01%.
CPI for August edged slightly higher to 2.9%, reflecting persistent service and shelter pressures.
Knudson’s Perspective
Knudson interprets this week’s decline as encouraging but cautions that elevated spreads show lenders are not yet confident enough to pass on the full benefit of falling Treasury yields. He expects continued moderation in inflation toward the 2.5%–3% range to gradually ease spreads, though the adjustment is likely to be slow.
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