Episode summary
How long can mortgage spreads hold off 7% rates?
HousingWire Daily
· · 20 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Rising mortgage rates are again pressing against the 7% level, but Logan Mohtashami argues mortgage spreads are still doing enough to keep most borrowing costs below that line for now. He says the latest jump in oil and the move in the 10-year Treasury yield, around 4.76, have pushed pricing higher, and that there are limits to how much spreads can offset the bond market if the conflict worsens.
On the housing side, Mohtashami says the tracker still shows a slow, orderly cooldown rather than a breakdown. Weekly sales, pending sales, inventory growth, price cuts, and new listings are all moving modestly, with new listings still positive year over year. He says the housing market has been unusually consistent for nearly four years: rates below 6.4 tend to support demand, while rates above 6.64 and especially above 7 cool it down.
He also says the bond market is driven more by data than politics, and that this week’s jobs report is the key event for the Fed outlook. Even so, he thinks the recent conflict, sticky inflation, and stable labor data give hawks more room to keep policy restrictive, which is bad for housing even if the broader economy looks resilient.
Key takeaways
- Mohtashami says mortgage spreads are still cushioning borrowers, but only to a point, and a higher 10-year yield could push mortgage rates over 7%.
- He says the housing tracker shows a slow slowdown, not a crash, with weekly sales, pending sales, inventory, and price cuts all moving methodically.
- Mohtashami says new listings remain positive year over year, which he views as evidence that sellers are not under broad stress.
- He argues the bond market is focused on data, not midterms, and that this week’s jobs report is the main near-term test for rates.
- He says the combination of stable labor data, hawkish Fed rhetoric, and conflict risk is keeping pressure on housing even as the broader economy holds up.
Notable quotes
“mortgage spreads have kept rates under 7%. It It did it again today, but, man, there are limits to what spreads can do”
“the tracker again is is telling the kind of the same story”
“the bond market doesn't really care about politics. Doesn't really care about um midterms. It does care about the data”
How the episode opens
Welcome everyone. I'm joined today by my podcast partner, lead analyst Logan Mohtashami, to talk about rising mortgage rates and the housing data. Before we dive in, here are the top five trending articles on housingwire.com.
First, we have my op-ed, The Wall Street Journal is wrong about FHA loans and non-banks, and they know it. Followed by the tracker, housing demand has slowed but still stable for now. Then we have FHA expected to keep classic FICO as it adds new model in January.
And Redfin names former Meta, Intuit executive as CEO. Finally, we have court rulings block Better's poison pill, keep door open for Garg proxy fight. Okay, we're ready to go.
And happy birthday, of course. Your Our fans would want to know it's your birthday.
Yes, yes. The Troy Daddy's 1 year older. I think the The guy who introduced me called me Luke Mohtashami, and I was like, I finally became a Jedi at 51. — Oh, that's too good. You're a Wolverine and a Jedi. Okay, that's pretty great. Okay, well, let's get to today's topic, which is Boy, we had a big escalation in the Iran conflict, which means oil prices went up and rates went up.
You know, the the irony of everything, our podcast yesterday is what we talked about, you know, what what do we really need to focus on? And I I know so much about wars, investments, and everything, but the conflict is front and center, and you know, then the trade war, there's not much you can do with AI spending, and then the you know, the labor data, if it stays, you know, constant, but the conflict is just one of these things. And we when we wrote that article a few months ago, why it's hard to get over 7%, but if the conflict gets worse, you know, so Sunday night we shot missiles, Iran shot missiles, Trump tweeted some AI slop video of blowing up, you know, Krug Island, you know, it's I'm like, "That's not exactly, you know, what I was talking about in terms of trying to, you know, calm things down.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- mortgage spreads
- mortgage rates
- housing demand
- nonbank lending
- fha loans
Companies and tickers mentioned
- META
- INTU
- RKT
- Redfin
- Meta
- Intuit
- Rocket Companies
- FHA
Watch the episode
Watch “How long can mortgage spreads hold off 7% rates?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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