This week’s snapshot: 10-Year Treasury at 4.45%. 30-year fixed mortgage at 6.49%. The spread between them is 2.04% — that’s 204 basis points, well above the historical average of about 170bp.
10-Year Treasury Yield — Last 6 Months
The 10-Year Treasury is sitting at 4.45% this week. Looking at the 6-month chart, we’ve seen a big move — rates bottomed around 3.96% back in late February, shot up to a high near 4.67% in mid-May, and have been drifting back down over the last month. The 1-month trend is definitely our friend here: yields are off about 22 basis points from a month ago. That’s driven by a cooling in some of the hotter inflation prints and growing expectations that the Fed stays on hold through July.
Mortgage Spread: The Hidden Cost
The spread between the 10-Year Treasury and the 30-year fixed mortgage rate is sitting at 204 basis points. Historically, that spread averages around 170bp. When it’s wider than normal like this, it means lenders are charging a premium for mortgage risk — and that’s baked into the rate you see when you shop for a home loan. This spread hasn’t budged much, which tells me that even if Treasuries keep falling, mortgage rates might not follow as fast. The higher spread reflects lender capacity issues, prepayment risk, and general uncertainty in the bond market. Until we see meaningful compression in this spread, don’t expect mortgage rates to plunge even if the 10-Year dips more.
Fed Watch: What Markets Are Pricing In
The CME FedWatch tool was unable to generate a full probability chart in this week’s scrape, but here’s what I know from the data I pulled: the next FOMC meeting is July 28-29, 2026, and the current Fed Funds rate is 3.50%-3.75%. Markets are pricing in about a 70% chance the Fed holds steady and about a 30% chance of a 25 basis point hike. Let’s be clear — there is effectively a 0% chance of a rate cut at the next meeting. The Fed has been clear: inflation isn’t conquered yet. The May CPI came in at 4.2% year-over-year (headline) and core CPI at 2.9%. PPI hit 6.5% YoY. That’s not exactly the kind of data that gets the Fed cutting rates.
What This Means for Twin Cities Home Buyers
Here’s the honest truth: 6.49% on a 30-year fixed is not great, but it’s a lot better than where we were a year ago. And if you’ve been sitting on the sidelines waiting for rates to drop below 6%, I wouldn’t hold your breath. The 10-Year Treasury has come down about 22 basis points in the last month, but the mortgage spread is still sitting at 204bp — well above the historical average. That extra spread is keeping mortgage rates elevated even as the Treasury market improves.
So what does that mean for you? If you’re buying in the Twin Cities this summer, competition is still real. The spring and summer market here is always active, and even with rates where they are, good homes in good neighborhoods are still moving. The difference is what price tier you can reach. At 6.49%, your buying power is compressed compared to 2021’s 3% rates, but you’re also facing less competition from investors and cash buyers than you would at lower rates.
Here’s the biggest piece of advice I can give: get pre-approved before you start shopping. Not pre-qualified. Pre-approved. With rates this volatile, you need to know exactly what you can afford and lock in your rate when the time is right. The spread between the 10-Year and mortgage rates tells me that lenders are cautious — they’re pricing in risk. That means your credit score, down payment, and debt-to-income ratio matter more than ever in getting you the best rate.
Looking Ahead
The next big data point is the June CPI report on July 14 and PPI on July 15, followed by the FOMC meeting on July 28-29. If inflation comes in cooler than expected, we could see the 10-Year dip further and maybe — maybe — some spread compression. But if inflation stays hot, expect rates to hold or even tick up. Either way, the Twin Cities market keeps rolling. My advice: don’t try to time rates. Buy when you find the right home at a payment you can live with. Rates will change. Location won’t.
Data sources: Federal Reserve (FRED), Freddie Mac PMMS, CME FedWatch. This is not financial advice — talk to your lender. I’m a Realtor, not a mortgage broker. But I watch these numbers every week because they tell me what my clients can actually afford.
Ready to Make Your Move?
Whether buying, selling, or watching — I’ll tell you straight what these numbers mean for your situation. Call or text: 952-994-4451 or use the form below. No pressure, no pitch. Just honest answers.