- 19 hours ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about how mortgage rates are reacting to escalation of the war with Iran. The two also discuss jobs week and what to look for in the jobs data.
Related to this episode:
Mortgage spreads are the only thing keeping rates under 7%
https://www.housingwire.com/articles/mortgage-spreads-are-the-only-thing-keeping-rates-under-7/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
To learn more about Total Expert visit totalexpert.com
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.
Related to this episode:
Mortgage spreads are the only thing keeping rates under 7%
https://www.housingwire.com/articles/mortgage-spreads-are-the-only-thing-keeping-rates-under-7/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
To learn more about Total Expert visit totalexpert.com
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.
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NewsTranscript
00:09Welcome, everyone. My guest today is lead analyst Logan Modashami to talk about the war escalation
00:15and what that's doing to mortgage rates. Before we dive in, I want to thank our sponsor,
00:19Total Expert, for making this episode possible. Logan, welcome back to the podcast.
00:23It is wonderful to be here Monday morning and it's already crazy. Wheeler, it just doesn't stop that
00:30until this war is over. Really, you just can't get any clarity on any kind of outlooks
00:38until you get a real ceasefire and real deal to get things moving again.
00:44Okay, so what happened this morning as far as the markets?
00:47So this morning, missiles were fired. Jets are being sent out. The UAE got attacked. The UAE
00:56wants to attack Iran. Our warships were targeted. So everything in terms of trying to get a ceasefire
01:04or Trump wanted to have security detail, in a sense, for boats to come through,
01:11it just escalated this morning. So what does that mean? Oil price is up. Brent is near yearly highs
01:19and the 10-year yield is almost back to the yearly high as well. We're almost at 448. I think
01:26the last
01:27time I saw it, we're about 445, 446. And every day that goes on, you're starting to wind yourself
01:34down to where the reserves are gone. The Federal Reserve is out there. A lot of the Hawk people are
01:39really pushing that the next move should be a hike, not a cut. So this is now past the four
01:45to six
01:46week period that was originally planned for it. And now we're going into what I'm concerned about
01:52always is an unforced error escalation, no progress, all hell just breaks loose. And we're in a different
02:02spot right now with oil reserves to have all hell just break loose.
02:07Okay. So when we had Godzilla tariffs, you noted last time on our podcast that when the 10-year-old
02:14got to 450, that was sort of an alarm bell for the White House. My question is, even if it
02:21is an alarm
02:21bell, and so they were able to pull off some of the tariffs, they changed tactics. Even if this is
02:27an
02:27alarm bell for them, do they really have, I mean, what can they do that would be definitive to make
02:32this seem like it was over?
02:34They don't have all the cards on this one. Iran has home field advantage with the straight.
02:44So it's a little bit more difficult. With tariffs, you can say 300% tariffs on Friday night and call
02:50it
02:50off on Sunday. I mean, if Trump really wanted to, he could end this and just declare military victory
02:58and move on. But we're not at that stage. And whatever progress is being done, we got to remember,
03:07there's probably also internal conflict with the Iranian government between their military and
03:13others in terms of who's really in charge. So it's a lot of drama. And it's one of these things
03:19now it's pushing rates. Now, on a positive side, last time we were here a few weeks ago,
03:26mortgage rates were at 6.64%. Today, they're at 6.52%. The spreads are a little bit better than
03:32they were earlier in the year. But as we always say, hug a mortgage spreads because in 2023, we're
03:37closer to 8%. 2024, we're 7.5%. In 2025, we're over 70%. So we're still kind of under that 6
03:47.64 level,
03:48but there's limits to what the spreads can even do here when policy, the bond market is trying to
03:57make things a little bit more restrictive. The 30-year is above 5% today, which rarely happens. So
04:05we're kind of almost to the limits to where I can go with the 10-year-old at 450 and
04:11460. Anything
04:12above that, you need the Fed to start talking hawkish to guide the 10-year-old higher. But
04:19we're just in one of those phases that do you really want to do that with higher oil prices,
04:24higher gas prices, higher rates and everything? This is the conflicted side of the Federal Reserve.
04:30If you try to get too hawkish or try to get more restrictive, that'll impact demand. So it's one of
04:40these things where, man, if this conflict just didn't happen this year, mortgage rates would
04:47have been probably still under 6.25 right now. The labor data is improving in the sense that it's
04:53not getting worse. So this escalation can get worse. That's my concern, that both sides are frustrated
05:04and somebody does something that even makes it worse without making it better.
05:08We do not need that, that's for sure. Okay, so one of the things I feel like we hear all
05:13the time,
05:14like, oh, the Fed's talking hawkish. Now they're talking about hiking rates. Like, if you're out there
05:19and you're running a mortgage business, like, how real is that to you, the idea that they would
05:24actually hike rates in the near future?
05:27So you need more votes for rate hikes. Just like the doves don't have enough votes for rate cuts,
05:34the hawks don't have enough votes yet for rate hikes. So right now we're kind of in between,
05:42but I would tell you there are probably more hawks than doves. There's probably not enough
05:46voting hawks to get a rate hike in. But, you know, in a sense, the 10-year yield rising and
05:55the 30-year yield rising, the two-year yield, they're already pricing in kind of no more rate
06:01cuts. So in a sense, it's a de facto tightening just by itself right there. So, you know,
06:09to get Kevin Warsh and everybody to unilaterally all go in for rate hikes, something terribly went
06:15wrong. And again, we're getting closer to the midterms. And, you know, it just, it looks like
06:23just, we don't know how to close this. And you have two parties that can escalate this even more.
06:34And I'm concerned that the Federal Reserve will do what they kind of do. They see oil prices going up,
06:40embedded inflation, and then they hike, and then the economy gets hit in that regard. So
06:46one day at a time. But, you know, we're in May now, and this is still going on. And reserves
06:54are
06:54dwindling. And we have a lot of headlines that say this is going to happen, that's going to happen,
07:01then things switch. You know, I think the Iranians are trying to do what Trump does is say something
07:06to talk the market up in terms of oil prices going up to add more pressure. So it's a unique
07:13kind of war
07:14because it's a lot of it's done on social media. You know, the trash talking back and forth to,
07:20you know, just, I'm sure Washington and Napoleon and the old generals of the past probably are
07:28thinking, what the hell is y'all doing out here? You know, but in any, this is the world we
07:33live in.
07:34So we, our focus is on the economic side. Thankfully, the spreads have improved a little bit or,
07:39you know, mortgage rates would even be a little bit higher today. But boy, you're, we are getting
07:45close to that kind of peak level or 450, 460. I thought as high as you can go, you get
07:50past that
07:51something really went wrong this year on the rate side. So we are going to talk about the tracker.
07:57But before that, I wanted to ask one more thing. What we're seeing a lot of is chatter out there
08:00is
08:00like, oh, the Federal Reserve buying, you know, doing quantitative easing and how that might help
08:06the situation. Just clear that up for us. Okay. So this is for all realtors and mortgage people
08:11in America. The Federal Reserve is not doing QE. They're not buying bonds to drive rates lower.
08:17Okay. Whatever they do on the operational side for the repo market is not bringing rates lower. So
08:25we have a housing wire website. There is a mortgage tracker in there. We talk about mortgage rates every
08:33day and what can drive it. There has never been its word by me. Okay. About the Fed is doing
08:39QE.
08:39Also, if the FHFA is buying mortgage backed securities, that's not the Federal Reserve.
08:44There's a lot of stuff out there that just doesn't make sense. And I'm afraid that
08:48a loan officer and a realtor are listening to some jackass on YouTube saying something that doesn't make
08:54any sense. And the Federal Reserve has made it very clear. They have no intentions on ever doing QE
09:02like they did in the past, unless you have zero interest rate policy. We are nowhere near zero
09:07interest rate policy. So everyone's going to have to get that out of their head.
09:11The war sending oil prices with inflation is bringing mortgage rates and the 10-year yield higher.
09:17The spreads are better this year. That's kept things somewhat in check. But those are the things
09:24that drive the 10-year yield day in and day out. Not QE is happening right now. That's not even
09:30a thing.
09:31I think that's a great clarification because as you said, people are like, oh,
09:35Fannie and Freddie did this. It's like two different things, two different outcomes.
09:39As you noted at the time, that was a defensive move. That was great for mortgage rates. I'm
09:43glad that happened, right? But that's not the same thing as QE.
09:47No, no, no, no. I think people get the FHFA and the Federal Reserve mixed up sometimes.
09:51And it's just, listen, there's channels, there's waves, there's economic data. Those are the
09:56things that really move this. Fed policy has a lot of rate cuts in the system now.
10:01So there's a fight between should we talk about hikes or cuts, right? So those are the things that
10:07matter, not some speculative theory that rates are going to go lower because the Fed is buying note.
10:11Okay. So you mentioned spreads several times there, and that was the focus of the tracker this week.
10:16As you said, every Saturday, we have fresh data every Friday. Friday night, you spend looking through
10:21it. You write the housing market tracker, which can be found at housingwire.com. Under the news tab,
10:25you can just go down there and click on it for anybody who wants to read it because you have
10:29all your charts there. And some of those charts just make it so clear what you're saying. They're
10:34amazing. But that's what you focused on this week, which was like the difference that the spreads are
10:39making. So maybe talk about what you're seeing in the tracker data.
10:42So we are talking about where we close to 8% mortgage rates. If we had the 2023 spreads,
10:48we are like close to 7.5% mortgage rates. If we had the 2024 spreads, we are over 7
10:54% mortgage rates.
10:55If we had the 2025 spreads. So this is why we hug a mortgage spread. Weekly pending sales,
11:02calendar week, multi-year high. Inventory growth is now down to 2.33%. We had a small decline week to
11:11week. The trend is we're going to have some negative year over year prints on the inventory data. But
11:15just remember that we're at an elevated level from the terrible levels of 2020 to 2023.
11:21So there's a lot more supply. Price growth is in check. So even though inventory is going,
11:28it's not like prices are about to take off or anything like in that. The supply demand equilibrium
11:33fixed itself on the inventory side. We're just not escalating out of control like some
11:41doomer accounts have been talking about. So inventory growth is now at the lowest levels
11:45we've had on a year-over-year basis. Also remember the comps are going to be very hard until mid
11:50-June.
11:51Last year, the peak was about 33%. Now there's a lot of places that are down year over year,
11:56but the growth rate is now down to 2.3%. And you slope of the curve, Sarah Wheeler, that's what
12:01we do.
12:02So inventory is still growing. It's just not growing as fast.
12:05It's just not growing as fast, especially as some people thought. The housing market shifted when,
12:11Sarah?
12:11Mid-June.
12:12Mid-June of 2025. And we said it's going to take six to nine months for people to figure it
12:16out. I
12:16think hopefully there are some people that even if you're the biggest doomer in America and planet
12:21earth, you're like, you know, the inventory data isn't really going vertical now. And we always said
12:27it takes six to nine months for that to kind of seep in until where people can visually,
12:30I suppose if you're blind and you can't read, then you're deaf might be a problem. But outside of
12:36that, you know, market change back then, the rate construct is still in a, you know, a workable
12:44phase. I mean, it is a shame that what we had at the start of the year with six and
12:49a quarter under
12:49no volatility, we would have ran a couple hundred thousand home sales easily. But even with all the
12:55drama and all this crazy, the spread has kept the rates good enough where we still have, you know,
13:00housing demand intact and sales can still grow for now. But again, we are getting closer and closer
13:06to that. When we get past 6.64 and head to seven, that becomes an issue for the marketplace. But
13:12again,
13:12with spreads being as good as it, it's hard getting rates over seven because it's hard getting the 10
13:16year yield over 460 with where Fed policy is. So a good tug of war. But again, we're still working
13:23off
13:23of these Monday headlines and Sunday nights and weekends. And, and the focus is, is all going to
13:29be on this where we should be focusing on the economic stuff. And that's why clarity and getting
13:34this situation resolved. Then you could get these Fed hawk members stopped. All they want to talk
13:40about is the war keeps on going on. We need to hike rates. We need to hike rates. We got
13:45rate hikes priced
13:46in now in 2027. So this has gone long enough to where people are looking out. And that's the reality
13:53of embedded inflation out there. So hopefully this thing will end soon and then we can move on. But
14:01until then, this is the marketplace we got to deal with. We think of a spring home buying marketplace,
14:06right? That this is just like seasonally when people are generally looking to move, they can move,
14:11then get settled. They can sell their house, whatever, before the school year starts. When we have all of
14:16these kinds of factors going on, does that sort of push it? Like, in other words, maybe, you know,
14:21if, if the war ends that, oh, we see June pickup or it is, does the seasonality really run things?
14:27I've never cared for the seasonality of things because of this reason. If you look at the last
14:3115 years, the best monthly sales prints we've had were in winter. Okay. So even, even, even with us,
14:39when we created the tracker, we wanted the tracker to be a forward-looking guiding demand curve
14:43and, and supply demand equilibrium data line. Uh, so what happened is there has been three times
14:49where that changed positive late 2022, November 9th. You remember that date? Oh yeah. Mid 2024
14:55as well. Mid 2024, it was a little bit confusing to people because purchase application data was
15:00negative year over year, but our forward-looking tracker was getting better. So we said, go with the
15:04week-to-week data over the purchase apps. We had a couple hundred thousand more home sales then.
15:08And then last year, starting in mid, uh, uh, June, 2025, we grew sales to a nine month high in
15:15December and then holidays happen. Then that storm happened. Then the wars happened. But even with
15:21that, we're still, you know, kind of intact for growth, but man, if we just hypothetically speaking,
15:28let's just say that the war's over and the fed starts talking a little bit more, my 10 year yield
15:34goes down a little bit. We're under six and a quarter. We could have a similar kind of second
15:38half of 2026, like we did in 2024, 2025 and late 2022 as well. Um, that February print, um,
15:50in 2023 was one of the biggest month-to-month sales prints ever outside of like the COVID crazy data.
15:56Uh, so we can grow sales from that. The seasonality is always there with, I mean,
16:02you can see it in our tracker datas where our weekly pending sales, new listings, everything
16:05pricing, all that stuff moves with the seasonality, but you can have higher existing home sales prints,
16:12uh, in the fall and winter. So one thing you always look at is new listings. And during this
16:16time of the year, you want to see new listings between 80,000 and a hundred thousand per week
16:21for, for several weeks, right? We have not been able to get that last couple of years.
16:25Where are we on that, on that metric right now?
16:28So last year we got about 80,000, uh, we had 83,000, but we got that kind of, uh,
16:33later in
16:34May and then that was it. Uh, we would fall down. I mean, we would, yeah, we would get it
16:39for one
16:39week. We'd come back down. We'd go above 80,000, come back down. And then that was it. Uh, this
16:43year we got about 83,000 a little bit earlier. Uh, last week we had a dive, you know, sometimes
16:48a
16:48new listings data has just this weekly curve, like a lot of housing data on a week to week basis.
16:52So some people should be a little bit careful in reading too much on, on the week to week stuff
16:57on there, but I'm hoping that we could just get the new listings data back up above 80 and just
17:02at least get two weeks, just give me two weeks above 80,000. And I'll, I'll take it as a
17:08victory
17:08because it was, you know, it was, you know, in 2024, I thought we could get above 80,000. We
17:13didn't,
17:14we were at 5,000 short last year. I thought we could get above 80,000. We did, but we
17:18didn't
17:18have any growth. So this year there's still a chance of us to get growth above 80,000, at least
17:23back-to-back weeks or something like that. Again, small steps. We're, we're moving our way somewhat
17:28back to normal again, and most sellers are home buyers. So that's, uh, that, that, that to me is
17:33a positive. And just for everyone's context is key. Our new listings data normal is 80 to a hundred
17:40thousand. It's actually been rare to get above a hundred thousand over the last, uh, uh, 10 years,
17:45but during the housing bubble crash years, this thing was running at 250 to 400,000 per week for
17:51years. I can't even imagine that even, even the seasonality low point, uh, uh, uh, uh, in December
17:58or January when nothing happens, that market was so stressed that if I took the highest new listings
18:05in the last five years and doubled it, it wouldn't even reach the levels of the lowest new listings in
18:11the seasonal low, slow part of doing that time. So much different marketplace. Uh, but this is
18:16where we are. And, uh, uh, hopefully the conflict gets the end soon. We get back to data and, you
18:22know, jobs weeks coming up. So here we are again, another, another, uh, jobs weeks with rising
18:27inflation and war and everything just to throw another, you know, hot pepper into the, into the,
18:32into the soup. Okay. I like this metaphor, hot pepper into the soup. Okay. What do you expect
18:38for jobs week? And at this point, what matters with jobs week? Because it feels like it's kind
18:43of a, unless something really big happens, unless something breaks, it's not going to make any
18:47difference. So the federal reserve has written two little mini dissertations, basically telling us
18:52that if we create 30,000 or more jobs, we're fine. A month, a month, you know, they'll be completely
18:58fine with that. Uh, jobless claims are still historically low job openings are getting softer
19:04internally, but they're not breaking the labor data was never breaking the fed. Like we've always
19:10stressed this from 2022. Even we said the federal reserve are jobless claims. People, they need to
19:15see jobless claims, start to head toward 300 before they, you know, start to do anything that's never
19:20occurred. So now they're writing articles about, Hey, listen, job growth at even at 30,000 is fine.
19:27So unless you get higher unemployment and lower jobs data than that, federal reserve is just not
19:32going to care, you know, at this point, because they, they're just, they're going to say the labor
19:37force growth is, is too slow. And we just don't have enough people for work. I don't agree with
19:42that premise because you get these big job number prints and they go, where do these people come
19:46from? You know, so they're there, but they are, they made it very clear that, uh, uh, unless you get
19:53jobless claims, rising, rising on a plane or some negative numbers, even, even a 30,000 month job is
19:59perfectly fine. This is what we talked about this last year that we have to be careful. At one point,
20:04the federal reserve is basically making that policy. And they kind of did with some of the
20:07work they've written recently, man, so much going on. Thank you for joining us today to, to break it
20:12all down. Of course, I'll be talking to you again soon. Appreciate you so much. And what you're in,
20:18uh, Utah today. I am in deer Valley, uh, Utah at the grand Hyatt. This is lovely. This is just
20:24a
20:24lovely, beautiful resort, a beautiful area. So, uh, I am spoiled. I'm about to talk in about
20:29two or three hours. So, uh, uh, just a beautiful place, man. Ooh, this country has some beautiful
20:36scenery. And this is one of the things I know this is one of the benefits of nurturers going to
20:41places
20:41that I've never gone to, uh, and enjoyed it. Well, good luck on your talk. We'll talk again soon.
20:47Thanks, Logan.
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