Episode summary
How inflation is going to impact mortgage rates
HousingWire Daily
· · 18 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami argued that the latest inflation data and the Middle East war have pushed mortgage-rate expectations into a more complicated range. He said inflation was already running hotter before the conflict, with goods inflation accelerating from tariffs, and the war has now added embedded energy and transportation costs that could keep rates elevated longer than many expected. His base view for mortgage rates stayed at 5.75% to 6.75%, but he said the odds of a quick drop are weaker because the Federal Reserve has lowered the bar for acceptable job growth while inflation remains above target.
Mohtashami emphasized that the Fed’s focus has shifted toward tolerating very low job growth, but wage data still matter. He said the BLS wage growth figure has eased to 3.5%, yet other data suggest wage growth is firming for job switchers, which could delay the last two expected rate cuts. He also pointed to oil around 98, diesel prices, and higher transportation costs as channels that could keep consumer inflation sticky into the second half of 2026.
He framed the problem as broader than mortgages: if the war drags on, it could affect retail sales, consumption, and investment, while also keeping the 10-year yield from falling much further. His message was that housing and mortgage markets are no longer dealing with just a soft labor market, but with inflation shocks layered on top.
Key takeaways
- Logan Mohtashami kept his 2026 mortgage-rate forecast at 5.75% to 6.75%, saying spreads improved enough to trim the top end by half a point.
- Mohtashami said inflation was already a problem before the war, and the conflict is now adding energy and transportation costs that may keep prices sticky.
- Mohtashami said the Federal Reserve is willing to accept very low job growth, but firmer wage data could delay the last two expected rate cuts.
- Mohtashami said he is watching retail sales and consumption because higher oil and diesel prices can work through the economy beyond housing.
- Mohtashami said the 10-year yield around 4.30% to 4.60% remains plausible if inflation stays elevated and labor data stays soft.
Notable quotes
“I shaved half a percent off this year because the spreads got better”
“the goods inflation is accelerating. That's all tariffs”
“the war has come in and that's going to put embedded inflation for some time”
“if wage growth got to 3% and under, the Fed the Fed changes their tune”
“I'm keeping an eye on wage growth, you know, because if for some reason that firms up, that's something that was not in the playbook for 2026”
How the episode opens
Welcome everyone. My guest today is lead analyst Logan Mohtashami to talk about those inflation numbers and what that means for mortgage rates. Before we dive in, I want to thank our sponsor Total Expert for making this episode possible.
Logan, welcome back to the podcast. It is a wonderful to be here. I am in Boise, uh Idaho.
This is my third time here and you are in what, San Antonio? San Antonio, here for an auto mortgage event. Yes, and you know, for a change, you know, of course the the ceasefire and everything and by the time this podcast comes out on Monday, who knows what's going to happen, but um this is actually going to be an economics discussion.
Uh not so much tied to the war and we we've got some inflation data uh last week and um it's not heading in the right direction and of course some of the energy stuff is now uh oil related, but the question is, you know, can rates stay elevated longer than people think because we're not making any progress with inflation, the jobs data because the Federal Reserve has really lowered the bar for what they deemed to be acceptable. And this doesn't mean rates go back up to 7 or 8 or 8%, but it does mean that, you know, we could probably stay uh a little bit higher than what people thought. I know some people thought, you know, when wars comes into place, you know, rates can maybe go down, but you know, the the inflation data is not helping uh the Federal Reserve or the White House.
Okay, so explain that a little bit. What did we see in the inflation data and how is that data influenced by what was happening with the war?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- inflation
- fed policy
- mortgage rates
- cpi
- housing market
Watch the episode
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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