The TED spread represents the difference (spread) between what banks and the U.S. government pay to borrow for three months.
The U.S. government is considered to be “risk-free” while banks are not. As such, the TED spread is a common indicator of credit market risk.
As risk goes up, it affects lenders’ funding costs. That can manifest itself in higher mortgage rates.
A “normal” TED spread is considered to be 10 to 50 basis points (bps), with the long-term average being roughly 30 bps.
Here’s a link to it’s current value.
In October 2008, the TED spread reached an astonishing 460 basis points. That coincided with variable mortgage rates rising to a virtually unprecedented prime + 1.50% at some major banks.