Mortgage Rates Update: September 4th, 2025
- Jeff Hulett
- Sep 6
- 1 min read
This week’s mortgage market delivered modest relief for borrowers, as rates edged lower while spreads remained elevated. Economist Bill Knudson underscores how this mix reflects both incremental progress and continued caution in lending markets.
For a $100,000 loan at 6.50%, the monthly payment decreased $4 to $632.
Upcoming releases:
The next new jobs report is Sept 5
The next CPI release is Sept 11.
The next Fed meeting is Sept 17
Key Developments
Mortgage Rates Decline:
The 30-year fixed mortgage rate fell 6 basis points (bp) to 6.50%.
On a $100,000 loan, the monthly payment dropped $4 to $632.
Affordability Metrics:
Interest expense: $379/month, or 60% of the total payment.
Income needed to qualify: $27,089, with a 3.7x multiplier.
Spread and Market Positioning:
The spread between the 30-year mortgage and the 10-year Treasury narrowed slightly to 233bp.
This remains 65bp above the long-term historical average (168bp), signaling that lenders are still building in a significant “safety cushion.”
Economic Backdrop:
CPI holds steady at 2.7%.
The 10-year Treasury yield slipped to 4.17%, reinforcing the broader downward trend in rates.
Knudson’s Perspective
Knudson interprets the easing in mortgage rates as a sign that borrowers are beginning to see modest gains from a stable inflation environment. However, the wide spread reminds us that lenders remain risk-sensitive. He expects that as inflation moderates into the 2.5%–3.0% range, spreads will narrow, gradually improving affordability.
Comments