Episode summary
Mortgage rates hit yearly high
HousingWire Daily
· · 22 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami said the latest jump in mortgage rates is being driven primarily by the Iran conflict, not by a sudden deterioration in the economy. He argued that Brent crude above 100, 13 straight days of bombing, Houthi attacks in the Red Sea, and a hawkish Federal Reserve have pushed the 10-year Treasury yield higher, with the benchmark recently reaching the 4.71% to 4.72% area and mortgage rates hitting 6.85% on Mortgage News Daily.
He said the labor market is still holding up, pointing to jobless claims at the lowest level since 1969 and arguing that fears of an imminent AI-driven wave of unemployment are overblown. In his view, the bond market is reacting more to conflict and oil than to domestic recession risk, and the market has already priced in a lot of bad news.
Mohtashami said he still does not expect a July Fed rate hike, even though traders have assigned some odds to one, because policymakers already got much of the tightening they wanted through market pricing. He also said mortgage rates could move above 7.25% only if the Fed gets more aggressive or credit spreads worsen, while a return to 6% is unlikely unless Fed policy shifts materially.
Key takeaways
- Mohtashami said the Iran conflict, not weak labor data, is the main driver behind the recent move in mortgage rates and the 10-year yield.
- He said jobless claims at the lowest level since 1969 show the labor market is still fine and not breaking.
- Mohtashami argued the market has already priced in much of the Fed’s hawkishness, which is why he does not expect a July rate hike.
- He said mortgage rates around 6.85% can persist even with oil above 100 because spreads are helping compress volatility.
- He put 30-year mortgage rates above 7.25% only in a scenario where the Fed gets much more involved or credit spreads worsen.
Notable quotes
“Brent crude oil is above 100 for the second time this year. We've had 13 straight days of bombing”
“jobless claims today. The lowest number since 1969 you know and you know you you've heard me talk about this at events”
“This is not 1.0. This is 2.0. And then President Trump comes out and says, "I'm I'm ready to do the biggest attack ever”
“I believe 65 to 75% of this is Fed policy, right”
How the episode opens
Welcome everyone. My guest today is lead analyst Logan Moto Shami to talk about mortgage rates hitting a yearly high as the Iran conflict continues to escalate. Before we dive in, here are the top five trending stories on housingwire.com.
First is Logan's article on this topic. mortgage rates hit yearly high, followed by voters and all parties support federal housing help beyond the road act. Then we have the tale of two Miami housing markets reflects changing priorities and international demand.
And another local market story in DFW, housing affordability slips even as builders report strength. Finally, we have house passes bill to ease banking regulations. You can read all of those with the HousingWire subscription and you can get a 20% discount with the code podcast 20.
Logan, welcome back to the podcast.
Holy conflict 2.0 Batman. Sarah Wheeler, imagine if I told you late July, we'd be in a conflict in the Middle East. Brent crude oil is above 100 for the second time this year. We've had 13 straight days of bombing. The Houthis are now attacking ships in in the Red Sea. And the Federal Reserve has gone completely hawkish right before the Fed meeting and mortgage rates are still under 7%.
I mean, that's pretty great. But they are at yearly highs. they are at yearly highs and um you know the spreads could only do so much, right?
Because the the 10-year yield and 30-year mortgage rates slow dance with each other. Um but uh the you know as we've talked about in the past the conflict was the big driver of how the bond market reacts to the news how it reacts to oil prices going up because the labor market got better and jobless claims today. The lowest number since 1969 you know and you know you you've heard me talk about this at events.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- mortgage rates
- housing market
- iran conflict
- federal housing policy
- housing affordability
Watch the episode
Watch “Mortgage rates hit yearly high” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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