Episode summary
Why aren’t mortgage rates dropping along with oil prices?
HousingWire Daily
· · 19 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami says mortgage rates have not fallen in step with oil because the market is no longer pricing rates off oil alone; it is pricing in Federal Reserve policy. He argues the 10-year yield has stayed inside a familiar range even as oil has dropped for about 21 days, because the Fed shifted from talking about cuts to sounding hawkish, and Wall Street firms have started talking about possible rate hikes in 2026.
He says the key framework is not a one-to-one relationship between oil and mortgages, but the interaction between the 10-year Treasury, Fed messaging, and mortgage spreads. In his view, spreads have helped keep mortgage rates below 6.64% for most of the year, limiting volatility even when the 10-year yield moved higher. He points to prior periods, like 2011 to 2014, when oil stayed elevated but mortgage rates did not surge because policy was less restrictive.
Mohtashami expects oil’s decline to feed into inflation slowly, over months rather than immediately, and he says the bigger catalyst would be Fed officials backing away from hawkish language. Until that happens, he thinks the current range for rates is likely to hold for the rest of the year.
Key takeaways
- Mohtashami says the main driver of mortgage rates right now is Fed policy, not oil prices, because the market has shifted into pricing possible hikes.
- He argues mortgage spreads have been the “salvation,” keeping rates below 6.64% for most of the year and dampening volatility.
- He says oil’s drop should help inflation, but only after a lag of several months, not immediately.
- Mohtashami thinks the 10-year yield should stay in a broad range unless there is a material policy shift from the Fed.
- He says the clearest signal for lower rates would be Fed governors openly dialing back their hawkish stance.
Notable quotes
“the slow dance between the 10-year yield and 30-year mortgage”
“Fed policy matters more. And a good example is 2011 to 2014”
“we went from two to three rate cuts to a rate hike”
“the lower the oil prices go, you know, the better it is for diesel and food transportation and everything”
“The mortgage spreads story though is the salvation”
How the episode opens
Welcome everyone. My guest today is lead analyst Logan Mohtashami to talk about mortgage rates and why they aren't dropping along with oil prices. Before we dive in, here are the top five trending stories on housingwire.com.
First, we have our article on Congress passes 21st Century Road to Housing Act, sends bill to Trump, which is just a huge huge story. That's followed by Logan's why mortgage rates haven't followed oil prices, our topic today. And then HUD tests new Operation Breakthrough for today's housing crisis.
Finally, we have Fannie and Freddie's new rules change the playbook for condos, buyers, sellers, and managers, and Fannie to expand title program. Lots of policy changes in that top five. Um now let's dive into mortgage rates.
Logan, welcome back to the podcast.
It is wonderful to be here, Sarah Wheeler. A lot A lot of things to talk about today.
So many things to talk about. I'm in DC and I met with a a bunch of leaders yesterday, um trade association leaders, some of the people from agencies. The Road to Housing Act everyone's super excited about.
And mortgage rates, which is what we're going to talk about today, um because it's it's interesting to everyone that we we've had oil prices drop, mortgage prices and mortgage rates haven't dropped along with them so much. You wrote an article about this, so let's dive in.
So as we are talking here Wednesday morning, um the 10-year yield is down a few basis points, about 443, 444 last time I checked. Um oil prices kind of short-term peak last, I think it was June 3rd. It was about $95. And since that time, oil prices have been coming down. So for 21 days, we've seen oil prices fall and the 10-year yield hasn't been moving as much.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- mortgage rates
- oil prices
- interest rates
- mortgage markets
- fannie mae rules
Companies and tickers mentioned
- FNMA
- FMCC
- PHM
- Fannie Mae
- Freddie Mac
- PulteGroup
Watch the episode
Watch “Why aren’t mortgage rates dropping along with oil prices?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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