Episode summary
Mortgage spreads continue to keep mortgage rates in check as Iran war spreads
HousingWire Daily
· · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Mortgage rates are being kept near 6% by improving mortgage spreads even as the Iran conflict pushes oil higher and tests the bond market. Logan Mohtashami argued that the 10-year yield has not broken the levels he wants to see — especially a close above 4.15% — so the market is still treating the escalation as serious but not yet as a full inflation shock.
He said the recent move in mortgage-backed securities acted as a defensive mechanism, absorbing some of the upward pressure in yields and keeping mortgage rates from spiking above 6.25% this year. Without that spread improvement and prior Fed rate cuts, he suggested mortgage rates could be 15 to 30 basis points higher. The combination of hotter inflation data, still-strong labor readings, tariffs, and war makes the rate outlook messy, but the spread story has damped volatility.
Looking ahead to jobs Friday, Mohtashami said the report could be noisy because of seasonal and winter effects, and he wants to see whether yields can finally close above 4.15% if labor data comes in firm. He also tied the bigger macro debate to wages, productivity, AI, and private credit, arguing that all of these could matter more if the conflict broadens or if rates fail to respond to the new risks.
Key takeaways
- Mohtashami said mortgage spreads have acted like a "wartime economic hero," keeping mortgage rates near 6% despite the Iran conflict and higher oil prices.
- He expects the 10-year yield to need a close above 4.15% before he believes markets are fully pricing in a larger war-and-inflation shock.
- He estimated mortgage rates could be 15 to 30 basis points higher without the spread improvement and MBS support seen earlier in the year.
- He said Friday’s jobs report could come in distorted by seasonal education hiring and winter weather, making the market reaction harder to read.
- He argued that wages, productivity, AI-driven disinflation, and private credit are the key X factors if the lower-rate camp gets its way.
Notable quotes
“Here I come to save the day, you know. Um that was mortgage spreads this week”
“I want to see that because to me it's like it yields warrant to be higher just on the inflation and economic data”
“mortgage spreads are now a wartime economic hero. you know, during this crazy week that we've had”
“We have not had mortgage rates above six and a quarter the entire year”
“I want to see if the 10-year yield can close above 415 and sell it off”
How the episode opens
Welcome everyone. My guest today is lead analyst Logan Moto Shami to talk about the role of mortgage spreads in keeping mortgage rates low as we are in this conflict with Iran. Before we dive in, I want to say thank you to our sponsor, Trust and Will, for making this episode possible. Logan, welcome back to the podcast. Sarah, do you remember um Mighty Mouse?
Yes, I do. Yes. — Here I come to save the day, you know. Um that was mortgage spreads this week. — Absolutely.
Uh uh yesterday because this is Thursday morning. Thursday morning very key. I mean oil prices are going up again.
The 10-year yield tested that 415 level early in the morning. It's bounced off of that twice. And for those that read the tracker article uh uh over the weekend, uh we said that the 10-year yield needs to close above 415 and get follow-rough bonds selling mean yields go higher for me to believe that the market believes this is going to be a bigger and bigger thing.
And of course, the Iran war is now on multiple days and it doesn't look like it's ending soon and ships are being hit by drones and and insurance rates are going up and there's all these things that are happening now. And yet, even with all that, the 10-year yield still hasn't broken a level that I need to see or I need to see uh WTI oil prices to get above 82 for me to like think, okay, everyone is this is going to be a real big deal because this isn't going to this isn't going to end anytime soon. But yesterday morning, mortgage rates went lower.
I know. — You know, the pricing Yeah. And I was just thinking, you know, you know, we brought out the peanut butter jar, mortgage spreads tasting delicious and everything.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- mortgage spreads
- mortgage rates
- jobs report
- iran war spreads
- mortgage market outlook
Watch the episode
Watch “Mortgage spreads continue to keep mortgage rates in check as Iran war spreads” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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