Will mortgage rates get ahead of oil prices?

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the divergence in the 10-year yield and oil prices and how that could help mortgage rates even as the Iran war continues.  Related to this episode:  Compare Current Mortgage Rates - HousingWire https://www.housingwire.com/mortgage-rates/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire https://lnk.bio/housingwire  Want to go to The Gathering? Click here for your exclusive HousingWire discount. https://events.housingwire.com/the-gathering-2026?promo=HW10  To learn more about Total Expert click here.  https://www.totalexpert.com/book-a-demo?utm_campaign=336-DMG-2404-Evergreen-Prospect-ABM-PrimaryIndustries&utm_source=ppc&utm_medium=ppc&utm_term=GoogleAdwords&utm_medium=ppc&utm_source=adwords&utm_term=total%20expert%20mortgage&utm_campaign=Adwords+-+Search+-+TE+Branded+Keyword&hsa_src=g&hsa_kw=total%20expert%20mortgage&hsa_mt=b&hsa_acc=4174063755&hsa_grp=136003720296&hsa_ad=592916426535&hsa_cam=853687437&hsa_tgt=kwd-336376360465&hsa_net=adwords&hsa_ver=3&gad_source=1&gad_campaignid=853687437&gbraid=0AAAAADkvu6B3N6no4AkBwXlqBfonOLKQo&gclid=Cj0KCQjw4a3OBhCHARIsAChaqJMn1y--STxB3HCgsrONSlsWPsAdFID-55vA0BLLRrwlB5SXij55T10aAtHKEALw_wcB  The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:09Welcome, everyone. I'm joined today by lead analyst Logan Motoshami to talk about mortgage

00:14rates and whether the 10-year yield is getting ahead of oil prices. Before we dive in, I want

00:19to thank our sponsor, Total Expert, for making this episode possible. Logan, welcome back to

00:24the podcast. It is wonderful to be here. It's wonderful to have you here. So much going on.

00:28Okay, so I think the main thing I wanted to ask you about is the relationship between

00:34mortgage rates and oil prices because oil prices have been going up, up, up, and mortgage rates

00:39haven't. Last night, of course, last night, WTI, there's two oil things. There's Brent crude and

00:45WTI. WTI is what the White House wants under 100. They just don't like the headlines of oil prices

00:51over 100. So it was perking up higher because the Iranians hit a Kuwaiti tanker. And then like

00:5940 minutes after that, the Wall Street Journal or somebody said that Trump has told his aides he

01:06just wants to leave, doesn't care for the straits open, let other countries deal with it. And oil

01:12prices fell from that. 10-year yield fell from that. But what's happened is oil prices are still

01:20over 100, both WTI and Brent crude. But the 10-year yield got as low as 430. So the 10

01:29-year yield from

01:30Friday, Monday, Tuesday morning is starting to diverge somewhat against oil prices because oil

01:37prices are still elevated. So to me, it's that mortgage rates in the bond market will kind of

01:43get ahead of this conflict because a lot of people say, well, the 10-year yield is going lower. It's

01:49a

01:49recession. If I had a penny since 2011 for how many men, it's usually men, it's like 95% men

01:58that tell me

01:59the 10-year yield is, you know, say in a recession. So it's one of these things where if the

02:0410-year

02:04yield goes down, it's a recession. If the 10-year yield goes up, it's inflation. Either case, you

02:10know, it's 24-7 chaos. But that's not the case here. But you can start to see maybe the bond

02:18market

02:19gets ahead of oil if they think the conflict is coming to an end. Of course, there's crazy headlines.

02:26We're bombing. We're two weeks. We're four weeks. We're six weeks. The Middle East will pay for it.

02:31Whatever. It's just a chaotic headline. But starting to see a divergence. And it followed through

02:40Tuesday morning. So of course, the 10-year yield doesn't need ships to flow to get oil prices,

02:47but it can get ahead of any positive news. So don't automatically assume that the bond market

02:55going lower is saying it's going to be a recession. Because remember, if I had a penny for every guy

03:01that said that since 2011, I'd have like $6.7 million. But if the 10-year yield was under 380

03:09and stuff like that, that's another thing. But for now, keep an eye on that 10-year yield oil trade,

03:15because oil's up again. 10-year yield is lower. So we'll see how that goes for the rest of the

03:20week.

03:21Listen, good news. I mean, anything that's not spiking, the 10-year yield mortgage rates is good

03:26for us, good for our industry as we head into the spring home buying season. Or actually, I guess

03:31we're in it. We're completely in it now that this is coming out on April 1st. Oh my gosh, it's

03:36April 1st.

03:37We didn't even do like a... I didn't even have anything planned, like some sort of trick on you

03:44or something. I used to do that with my kids. You think you could trick me on April Fool's?

03:47Do you know what I used to do, Sarah? It would be hard to do like long distance.

03:52Wheeler, here's a funny true story. In 2017, I wrote an article. It's my most popular article for my blog.

03:58It says the US is going into recession. I listed all the crazy, dumb theories about the US going

04:07into recession in the last decade, which was the longest economic and job expansion history. And

04:11then I listed them all. And then I said April Fool's. And then I listed all the truths about it.

04:17And then at the bottom of the thing, I said, if you shared this article without reading it first,

04:22you're the jackass I'm talking about. And I'm telling you, Wheeler, I put that out there for like

04:27five straight years. And I used to get the same guys falling for it. All I can say is we're

04:31going

04:31to recession. Again, there are some men that just wake up in the morning and if doom doesn't

04:37surround them. So that's my April Fool's joke. Maybe we should link that to the next article out

04:44there. Do you remember the first time? So you did that on your blog. And then after you started

04:49writing for us, you're like, hey, can I do this on House of War? I was like, no, you cannot.

04:53You said no. No, no, no, Logan. No, bad, bad. It's like, you know, it's like that Twilight Zone.

05:00Bad man, bad man. Go to the cornfields, you know, said that there. But yeah, yeah, it's worked. And

05:06the best part is at the end of it. The funny part was watching people like say, hey, don't fall

05:12for

05:12it. He's tricking you. It was the same article for years. So it'd be really popular and get a lot

05:17of views, but it's just it's just the headline. So the 10 year yield going lower jobless claims rising.

05:22We go under the whole door line. Growth slows down. Consumption, investment slows down. Those

05:28are economic recessions. But not every time the 10 year yield goes down, you're you're getting a

05:33recessionary data. And we have we had job openings that came out today. OK, what did they what did

05:37they tell us? Same thing as always. Not a lot of hires, not a lot of fires. You know, it's

05:43just the

05:43no higher economy out there, but not a lot of fires as well. So I think this this is such

05:49a brand

05:49new concept for everyone because, you know, people just naturally think if we're not hiring

05:54a lot of people, we're going into recession, but we're just not hiring a lot of people.

05:58We're not firing a lot of people. So for the last four or five years, people see these headlines

06:02of these companies laying off this and that. Always remember people. If I die tomorrow, always

06:08remember this one and a half like to two million people lose their jobs every month. That is very

06:13normal. Right. Jobless claims never goes to zero. People get laid off all the time. Some people

06:18just don't do good. Companies have to resize and everything. And this is this is just how

06:22it works. But when you have a recession, growth slows down, investment slows down, consumption

06:27slows down, profit margins get hit. And then companies have to fire more and more people

06:33because demand is not, you know, that's that's not here yet. You know, oil prices and everything

06:38escalates and you hit pocketbooks. But it's a much, much different economy than people think.

06:45And again, I just think this all goes back to the 2008 mental disruption syndrome out there

06:52that everyone everyone thinks every single data lines talking about a recession or housing

06:56bubble crash and all that is not the most talented people in the world, but they are very loud.

07:01It is interesting because like you said, it's not just the hirings. If we'd have to have a whole

07:05bunch of people being laid off, we'd have to have that unemployment rate going a lot higher.

07:10Now, this is jobs week. You don't expect to see a lot there, do you?

07:14I mean, we haven't we haven't really had a good job growth period for 14 months.

07:20We have reports that are good, reports that are bad. Last month report was bad. But again, we

07:26we're basically two sectors are really growing the economy and labor. So, you know, if those start to

07:33deteriorate, you know, health care has so much demand, demand for labor. We need nurses, all these

07:38things, you know, so the demographics is good for that sector of the economy. But outside of that,

07:45not really much. And of course, the labor force growth has slowed down. So partly there's there's

07:50not that many people looking, but job openings are under 7 million. The hires are are down to lows

07:56of 2000. That is not a healthy labor market. I don't care what the Federal Reserve or Beth Hammock,

08:02Beth Hammock will come on TV. That's robust. The labor market's robust. What is everyone,

08:07you know? So and, you know, tax receipts from the IRS, you know, still going positive

08:14on the income side. So there are things to look at. But same story so far with job openings.

08:19We have ADP and we have jobless claims and then jobs Friday. Who knows who knows what headline

08:24between now and Friday that we're dealing with? There's really no telling. So when you when you

08:29talk about the economy that way, I'm going to say a word, Logan, don't get triggered. OK,

08:33don't get triggered by this word, but stagflation. If we're in a stagnant economy,

08:39is that what would you apply stagflation to our current situation?

08:44When people say stagflation, they think of the 70s. And if you wanted to make a stagflation

08:50light argument, it's just the unemployment rates at 4.4 percent. The growth rate of

08:58of the of the economy is still positive. Now, of course, now you have war. Right. So we had an

09:03oil

09:04conflict back then in the 70s. But if that oil conflict goes down, the 1970s was so unique because

09:11labor force growth was booming. People forget like housing was booming in the late 70s. We don't have

09:16that here. Right. We don't have housing booming because the labor force growth was so much back

09:21then. But we had double digit unemployment rates and double digit inflation. But to me, it's

09:29this what was happening with the economy happened before the war. And what's happening in the economy

09:34was somewhat what happened in the first trade war. If you're doing a trade war tap dance and you're

09:39throwing around 100, 200 percent, 300 percent tariffs and moving it back and forth, how are business

09:43supposed to like operate if things change? Right. And it's it's like Liberation Day has been a year

09:50now. Right. And this is why I have always talked about I remember what happened in 2018 and 19.

09:56But I remember that in 2019, when we started getting deals set up and everybody were we were running.

10:02Right. And I always tell people, I'll go back and look at January and February 2020 data. I remember

10:07every single one of them. Housing data was breaking out. ISM services breaking out. Retail sales was

10:13fine. Starts and permits and jobs data was beating estimates. So we got some clarity and we could

10:18run with it. But when you are when the government is so big in throwing out these, you know, agendas

10:25and these, you know, it's hard to get things kind of wrong. Now, we have a lot of AI spending

10:30that's

10:31starting to dissipate to a degree. We have AI construction. So we have a lot of money into the

10:36system. There's a lot of deficit spending. Right. Mandatory payouts. There's a lot of money coming

10:40into the system each month because we're an older country. So mandatory payouts go out. But

10:48I don't like using stagflation because the 70s is different than what it is now

10:52because the unemployment rate is low. And again, CPI inflation is sub 3%, but PCE and PPI inflation

11:00are over 3%. And that has a lot to do with the tariffs with a one time price offer. Once

11:04that is

11:05over, as Jerome Powell said, he thought about a half a percent to 1% added to the inflation data,

11:11and that's it. But then the war came. So I was like, just homie, just stay in the White House

11:18and don't say anything for like two or three months and then let the economy run. But

11:25yeah, as you can see, I didn't get triggered, Sarah.

11:30You didn't. Thank you. Thank you for talking about stagflation. I think one of the hard things

11:34with this war, this conflict, whatever you want to call it too, is that people are saying that like,

11:39if we do indeed say, okay, we're just going to leave. And I think Iran announced this morning,

11:44they're going to like, now you have to pay to get through the state of Hormuz,

11:49state of Hormuz. And just like that, the long lasting effects of this, even if we pull out today,

11:55it's not just such an easy, like, okay, things go back to the way they were.

12:00I'm pretty sure Iran wouldn't mind having a deal where they're not getting attacked anymore. I mean,

12:06we only see it on our end because what we're dealing with, just imagine how much damage that

12:11they're taking to their bases. And again, it takes money, right? It takes money to rebuild and

12:19everything in that light. So we'll, we'll see how that, you know, that the war variables are very

12:25tricky and with Twitter and we're back and forth on Twitter out here and just, it's, it's a, it's a

12:30brand new world, right? It was easier when it was let's play a game, war games. Was it 1982 or

12:37something, you know, uh, uh, uh, less complicated back then? Yeah. That's why I'm, I'm really glad

12:44to see that. We're not seeing the 10 year yield go up as much as it could right now. Right.

12:49It seems

12:49to be not tied to that oil because we, we just don't know what's going to happen. I mean, I

12:54would

12:54tell you this, if things escalated, let's say we were bombing their power plants and they were bombing

12:58the, you know, neighboring countries, a gas facilities, you know, you could see the 10 year

13:03real rise, but we're, we're just, we're kind of holding at bay, uh, uh, with a lot of things.

13:08So, uh, but for now I thought, I thought four 50 to four 60 would be, we've got four 48.

13:13So we,

13:13we never got to that level, but we'll see. And, you know, by the time this podcast comes out,

13:18who knows what headlines come out at three, four, seven o'clock PM. And just, it's just,

13:22it's too wild out there. It's too wild. Okay. Uh, what other, let's talk about other economic,

13:27um, reports coming out this week. Of course we have purchase apps as always.

13:31We have seen positive so far year over year growth. Do you expect that to change this week?

13:37You know, purchase apps to me, we're slowing down and the weekly pending sales were slowing down

13:42in the tracker, even though they're showing year over year growth. So purchase apps should get hit.

13:46You know, we, when you have positive growth rates and then you have rates go up half a percent that,

13:52you know, it doesn't mean that home sales are crashing or anything like that. Uh, but it's a little

13:57bit harder to keep that elevated growth out there. So, so I'm looking for, uh, uh, another negative,

14:04uh, uh, purchase app a week, but the question is, is, is the year over year positive? If there was

14:09ever a time where the year over year data could have its first negative, this kind of would be it

14:14because it's, it's somewhat of a back backward looking, but we've always said this for many,

14:18many years. It's, it's when, when rates were at above 7% and they break under 6.64 and head

14:24to

14:24six demand gets better when you get down to six, but when you break towards 6.64 and get above

14:29demand

14:29gets weakened, we don't go anywhere, right? We don't go anywhere with home sales. We just,

14:34we were just kind of stuck here at 4 million. Uh, but, uh, uh, again, uh, this, this could be

14:40the

14:40first official year that we have sub 7% rates the entire year and the majority of the year under

14:46six

14:46and a half. So, um, uh, it'll be very interesting test case by the time we have all the data

14:52out through

14:52the year. And again, you know, I wasn't looking for big growth. I only had 237,000 more existing

14:58home sales with rates six and a quarter and under. So you just work off the shift of the curve.

15:03I just thought that rates would go higher early on, you know, the spreads got better because of the

15:09purchase. And, you know, I thought maybe if we get some clarity with tariffs, we could run like we did

15:15in 2019, but that didn't happen. All hell it's broken loose and we're just sitting in chaos land

15:20right now. You know, the 10 year yield is up, you know, I think the high 448 on this, it's

15:26for a

15:26reason that, you know, no, nobody put war economics as, you know, they're, they're modeling for the

15:31year and we're just dealing with everything on a daily basis. I really appreciate that, Logan.

15:35Um, I would remind our listeners to come, come see Logan, come see me, hear Logan talk,

15:41hear us do a special version of the podcast version with my co-host, Sarah Wheeler, you know,

15:48because we're going to abandon this guest line and it's going to be co-host and we're going to be

15:53partners, you know, uh, co-host partners from now on. Funny for our listeners. Okay. Because if I make

16:00him the co-host, then he has to ask me questions and it's not just don't want to answer them.

16:06So.

16:06Well, but also, I mean, what, what our listeners need to know is the economic side. They don't

16:11need to know the things that I can answer so much. So, all right, we are, we are working

16:15towards the co-host title here. Okay. Uh, you are already my podcast partner. That's how I think

16:21about it. So I really do appreciate it. Also listeners, if you want to come to the gathering,

16:25we have a special code. It's HW10. That's HW10. And that gives you 10% off as podcast listeners of

16:33the cost of the gathering. It's going to be incredible. It's at the end of this month,

16:37April 27th, uh, through the 30th. So come see us and we can't wait. Logan. Thanks for keeping us up

16:44to date on everything.

16:45Roger.

Category

Transcript

Comments

Recommended