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Mortgage rates likely stay above 6% due to inflation and spreads
HousingWire lead analyst Logan Mohtashami said even oil easing and a downtrend in Treasury yields may still leave rates around 6.5% to 6.75% until clearer Fed guidance arrives.
Mortgage rates may remain well above 6% because multiple forces, including inflation pressures, Federal Reserve policy, Treasury yields, and mortgage spreads, limit how far rates can fall, HousingWire lead analyst Logan Mohtashami said at ACUMA’s annual conference in Las Vegas.
Mohtashami pointed to recent higher oil prices and gains in the 10-year Treasury yield as headwinds for the near term. He added that even if the Middle East conflict ends and oil prices pull back toward $68 to $70 a barrel, mortgage rates could still hover around 6.5% to 6.75% until the Federal Reserve offers clearer guidance on how it will lower rates.
He warned that affordability remains the main constraint on housing demand as inventory grows more slowly. Mohtashami also linked the mortgage outlook to how spreads behave, saying spreads generally deteriorate when the Fed raises rates aggressively or when credit markets show strain.
Mohtashami said job market dynamics are unlikely to quickly drive mortgage rates lower, citing an estimated “breakeven” job growth rate of roughly 33,000 jobs per month. He argued that jobless claims would be a more important indicator to watch for meaningful labor-market deterioration, and he noted that mortgage spreads are currently not showing the kind of stress seen during the 2023 banking crisis.