The month of July witnessed a sustained downward trend in the 10-year U.S. Treasury, as it dipped below 0.6%. Despite the downward trend of Treasuries, which are a proxy measure of the risk-free rate that the government offers on debt, mortgage rates through July did not decrease proportionately.

The spread between the 10-year Treasury and the 30-year fixed-rate mortgage rate (as tracked by Freddie Mac’s Primary Mortgage Market Survey) stayed constant through the first half of July and slightly increased in the second half of the month. In previous weeks, the Mortgage Bankers Association’s Weekly Application Survey increased with stirring of activity in adjustable-rate mortgages, which is less common as a means of home financing than fixed-rate mortgages.

As shown in the above figure, the spread between these two rates expanded at the end of July, hovering just above 240 basis points.

Tags: 30-year fixed-rate mortgage, mortgage rate spread, Treasury yield