The good, the bad and the ugly are back for mortgage rates

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about what the Iran peace deal, today’s economic data and the Fed’s stance on inflation mean for mortgage rates.  Related to this episode:  New home sales fall, but the trend is still sideways https://www.housingwire.com/articles/new-home-sales-fall-but-the-trend-is-still-sideways/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire https://lnk.bio/housingwire  The Top 5:   What happens to mortgage rates if the Iran conflict is over? https://www.housingwire.com/articles/what-happens-to-mortgage-rates-if-the-iran-conflict-is-over/  Housing markets are adapting to higher rates instead of freezing https://www.housingwire.com/articles/housing-markets-adapting-to-higher-rates/  The wait continues: Two Harbors stalls on CCM merger approval https://www.housingwire.com/articles/two-harbors-ccm-vote-adjourned/  Zillow and CoStar continue to spar over Matterport 3D tours https://www.housingwire.com/articles/zillow-matterport-3d-tours/  Is Zillow a public utility? Attorneys weigh in on MRED, Compass suit https://www.housingwire.com/articles/zillow-antitrust-mred-compass/  To learn more about Total Expert click here. https://www.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.

Transcript

00:09Welcome, everyone. My guest today is lead analyst Logan Modashami to talk about what

00:14the Iran peace deal, today's economic data, and the Fed's stance on inflation mean for

00:19mortgage rates. As always, I want to thank our sponsor, Total Expert, for making this

00:23episode possible. And I want to recap the top five trending stories on HousingWire.com.

00:28Logan's article on what happens to mortgage rates if the Iran conflict is over continues

00:33to dominate. And then we have housing markets are adapting to higher rates instead of freezing.

00:39Next is Two Harbors stalls on CCM merger approval, and two on Zillow. We've got Zillow and CoStar

00:45continue to spar over Matterport 3D tours, and Realtracks may suspend Zillow listing feed on June

00:521 over IDX rule. You can read all of the incredible content with the code PODCAST20 to get a 20

00:58%

00:58discount on a subscription. Okay, ready to dive in. Logan, welcome back to the podcast.

01:04It is wonderful to be here. What a week. What a day. It's Thursday morning and the last 16-17

01:12hours

01:13were a lot of drama, but really, really beneficial for everyone listening to this podcast today on

01:20kind of like now mortgage rates. Is it just a conflict or economic data or the Fed or all

01:28together? I feel like, you know, the good, the bad and the ugly, you know, where they're all staring

01:33at each other. And we can finally put all three characters into kind of the same plot now because

01:41I thought what happened Wednesday night and Thursday morning and everything where we are right now,

01:46the 10-year yield is right at 4.46%, kind of that first target level. And we're going to try

01:52to

01:52make sense of it all to move forward. So when you say what happened on Wednesday night, Thursday

01:56morning, you're talking about the fact that we did get a deal in place. It is sort of like a

02:01kick things out 60 days out, but that's stabilization, right?

02:06Well, actually, Wednesday night, we had missiles and drones and 24 and Chloe and Kuwait was being

02:15shot at and evening trading. The 10-year yield went up to 4.53. Oil prices went back up. There

02:23was all these negative headlines, you know, and then you just kind of wind down to the morning

02:28because, you know, evening trading tends to get a little bit more hectic. So we're sitting there

02:34thinking, is the deal on? Is the deal off? What's happening? Then economic data came back

02:40to play. And it's really good to see the bond market react to economic data today because

02:45the economic data we had yesterday was softer than anticipated. The PC inflation data is breaking

02:51out, but the core aspect, especially the super core of PC inflation, that was a smidge lower

02:57than what people were expecting. But with the consumption data, GDP, jobless claims are still

03:03very low. Real wages are negative now because oil prices are taking up. The savings rate has fallen.

03:10You put all these together, 10-year yield fell a few basis points right off the way. So we're back

03:15to

03:15maybe, you know, economic data being another variable. So we got one of those characters

03:21in there. And then, you know, we had some Fed governors make some statements. Williams talked

03:27talked about, you know, maybe higher productivity can bring higher real rates. You know, so we had a

03:33lot of things going on. Then on top of all that, the 60-day true ceasefire, whatever we're calling

03:40these things these days, that came off and it took the 10-year yield down a little bit lower,

03:45right to that 4.46 level that we talked about in the article over the holiday weekend and

03:52on the podcast before. So here we are. I thought it was a really good day to say,

03:57hey, we got all the three people back. You know, we got the good, the bad, and the ugly. They're

04:01all

04:02back in here again, right? And I think that's where you want to be. You didn't want to be where

04:09we were

04:09the week before, where the 10-year yields at 4.68, where oil inventories fall, we're about to

04:15summer months, you know, we're going to hike rates, everything. We're starting to get back to

04:20something maybe normal. But with more players involved, then we could work with that

04:27without worrying about, hey, listen, oil prices could go to $150, $170, the conflict's getting

04:33worse and everything. So in a strange way, it felt like a normal day because there's multiple things

04:41that we're talking about. And, you know, it's all a healing process, working your way back

04:46to normal. But I thought it was good to see that the bond market reacted to softer economic data

04:52today. So what do you think about people who are like, how did you get to that exact level? I've

04:57heard that some of that this morning where it's like, Logan, how do you know these things?

05:02Well, I just, we just, we, we, we observe where bond markets and everyone's got their own

05:06technical levels and stuff. I know a lot of, you know, a chartist is a chartist in pure form, but

05:15the way the bond market was reacting around that 4.6 level where it was a quadruple top,

05:21like, you know, we were, we were having a very hard time breaking above that. And then when all

05:26hell broke loose, we broke above that and all hell broke loose on the 10-year yield after that. So

05:30that

05:30would, to me, it's always the natural first target. That's the key level back then. So we get there.

05:36And we got there because there is a format of a deal in place or a ceasefire. And you can

05:42talk

05:42about the nuclear program 60 days later. In any case, the worst case scenario that I'm always

05:49concerned about after March 21st of escalation and not knowing how to close this out, because that

05:55takes you to a whole different ballgame. And to me, that's slowly, methodically with crazy headlines

06:04being taken away. And at least we're going to have so many skirmishes. We're going to have so many

06:09people who want the war to continue. But for now, at least that aspect is gone. Then we could go

06:14back

06:15to economic data, which I think would be positive. You know, if the economy is booming and everything's

06:20great, then it is what it is. But if the economic data is slowing down and then the conflict is

06:27ending,

06:27then the third variable, right? The good is the economic data. The bad is the conflict. And then

06:33the ugly is the Fed. So here we are. You know, my God, the kids, Sarah, the kids have probably

06:39never

06:40even seen the good, the bad and the ugly. Go watch it, everybody. No, no, you guys, you kids,

06:47you guys got to go watch that. It's great stuff. It's like me versus the doomers and then the crazy

06:51doomers. In any case, now the onus is maybe a little bit on the Fed again. You know, it's easy

07:00when you have an escalating conflict with rising inflation and oil prices going up. But, but homie,

07:07what if the escalation of the conflict is slowly winding itself out and the economic data gets a

07:13little bit, oh, the ugly is back in the game now. We're all looking at each other. So here we

07:17are.

07:18The onus is now on the Fed to start maybe changing their rhetoric if that is the case going out

07:25in

07:25the future, right? If we go out into the next four to six weeks and the economic data is a

07:31little bit

07:31softer, what does the, or what does Beth Hammock say? What does Lori Logan say? What does Austin

07:39Goolsby with that smirk of his say? What is Neil Kashkari say at that point? Because they,

07:45they totally 100% back the escalation of the war. I totally get that. But it makes their job a

07:51little

07:52bit more difficult if, if the data gets softer over the next six weeks. And if we're moving toward

07:58a ceasefire and can the Beth Hammocks and the Lori Logans and the others come out there and talk about

08:06rate hikes, rate hikes, rate hikes in that, which the irony was yesterday.

08:11No, no, no. You, you, this is the, this is what I was going to say. This is the craziest

08:16thing,

08:16right? The only person on who's saying what President Trump would want somebody on the Fed

08:23to say is who?

08:24Lisa Cook.

08:25Lisa Cook.

08:26Right, Governor Cook, who Trump wants to fire and has done all these kind of crazy out of the norm

08:32things

08:32to, to, to, to put her in the spot. Like she's the lone dove. So the irony of having two

08:38doves,

08:39two star cross economic lovers right there, right? Kevin Warsh and Lisa Cook are the lone doves left

08:47on the Federal Reserve, which I thought it was funny, you know, just, just reading that. So the

08:51irony of that is it's a crazy world, man. This is nuts. This is, this whole year has just been,

08:57just been just crazy factor after crazy factor. But Kevin Warsh has won somewhat of an ally in

09:08Lisa Cook. I can maybe put Mary Daly in there. Maybe that's a bit of a stretch, but, but now

09:16I

09:16think the fact that we're talking about deals and ceasefires and negotiations, maybe the worst case

09:23for the Federal Reserve is, is slowly abating. So for me going out the next six to eight weeks

09:29is that if the economic data gets softer, does the Fed change their rhetoric? Do they move into

09:37another side? And instead of putting, you know, their head down and going, Hey, listen, we're going

09:42to talk rate hikes because the Fed doesn't just raise rates one time. You know, it's not like, Oh,

09:47we're going to do one more hike. You know, usually if they stop hiking, they cut a little bit and

09:52they stop. Usually it's multiple rate hikes. You know, kind of Neil Kashkari talked about that.

09:56We have to maybe do multiple rate hikes, but now it's fair game. Now, now everyone's, everyone's in

10:04the open and choices have to be made. Verbiage, whatever is being said by Fed governors now,

10:13maybe you have to consider the possible ceasefire working to an ending. And then this is why it's

10:18really critical to get ships flowing, right? The Neil Kashkari's and the Austin Goolsby's cannot

10:24hide behind the middle East thing. If ships are flowing and oil prices are going down. So it is

10:30very, very key to get oil prices down, get diesel prices down and try to get to that other side

10:37by

10:38minimizing the damage as much as possible. And then, you know, real wages can, can, can look better

10:44again, unlike the data we saw today. Okay. I just, before we leave the topic of Lisa Cook,

10:49I just have to give her kudos for the fact that if you want it to be political about this,

10:54if you're

10:54Lisa Cook and you have been, the president of the United States has come after you very specifically

10:59personally. I mean, but she's stuck to what she thinks is right on an economic standpoint, which

11:05happens to line up with what he wants. And she's sticking to that. She's done that the whole time.

11:09She's never wavered. It's not about if he likes it or not, what he's doing. So I just want to

11:14say,

11:14I mean, that's, you know, someone who is, uh, has a lot of integrity to what they think,

11:18you know, the data is telling them and, and what they do. So just wanted to bring that up

11:23because that's, that's pretty incredible. Yeah. I mean, and, and not only Lisa Cook, but Powell,

11:29you know, it's all about the federal reserves independence in that. And, you know, trying to

11:35take over the federal reserve by putting your government, remember this, this all started in 2024,

11:41you know, with Scott Bessent and the shadow fed president and, and trying to get, I mean,

11:46Stefan Meyer, I, to the life of me before I die, I'm going to, I'm going to think to myself,

11:52Stefan Meyer was a federal reserve board member during this whole crazy thing. You should never

11:57have even been part of the process, but in any case with Christopher Waller becoming hawkish now,

12:03you know, that whole numbers game just blew up. But in any case, even a Christopher Waller

12:09going out in the future, does he change his mind? But again, the economic data has to get

12:15softer with scale for them to, to move this because the growth rate of PC inflation and everything,

12:20and there's just like weird stuff with the inflation data with chips. Like, you know,

12:25if you're buying a computer here and then they're going to incorporate their chips six months later,

12:29well, that chip price is just doubled, you know? So there's just some, there's really,

12:34there's just some crazy stuff out there on the world economy side, you know, is China really

12:39importing any oil. They're trying to hold things together without having oil prices take off. So

12:44in any case, I thought, I thought today was a good day that we got everyone back in the ball

12:50game again,

12:51because if it's just the escalation of a rod and oil prices going up and rates are going up higher,

12:56higher, higher, it's just, there's, you can't operate in this environment because everything

13:01is about Iran. I mean, all the tracker data is when we talk about, Hey, the economic data for the

13:05next

13:05week, I'm like, forget about all that. It's Iran, Iran, Iran, you know, now I get, I'm getting a

13:10feeling we can get back to it, right? Back to economic data, back to the Fed. And yes, the conflict

13:15is not over. We need ships going, but at least, at least it's so much better this Thursday morning

13:23than last Thursday where, you know, so, uh, absolutely small, small steps, you know, uh,

13:31what was the movie contact? Do you ever see the movie contact? Oh yeah. With Jody Fisher.

13:35Jody. I'll never forget that line. Small steps. That's how we've been doing it for billions of

13:40years. You know, this is like, lady, this is how we've done it for a billion years. Small steps.

13:45Don't go for it all. It's a small steps, work it over. And I think that at least is much

13:50more

13:51beneficial for everybody in the mortgage and real estate industry than what it was exactly a week

13:56ago. So you talked about steps, um, sort of, if we want to see rates fall and once we take

14:02the Iran

14:02conflict sort of out of the equation, or at least like out of that daily equation, just look at the

14:07economics. You outlined three, kind of three ways to get back down towards, um, 6%. Where are we in

14:14your, in, in that diagram of like, you know, it's not going to happen overnight.

14:18We're, we're, we are, we are just, we just hit step one. Step one is if the conflict is ending,

14:24we should get to 4.46 on 10 year yield. Okay. So that's, that's, that's the easy layup. Uh, um,

14:30after that, it gets a little bit more challenging, um, with better spreads. It doesn't, it doesn't

14:36need too much to get rates between six and a quarter and six and a half. So hug a mortgage

14:40spread of

14:41course, but, uh, we need ships to flow, right? We need energy prices down. They're still very

14:49elevated. We need diesel prices down and we need it with duration. Uh, so, so this is just a very,

14:55very, very first baby step, but at least it's a baby step in the right direction, right? Because

15:02where we were heading, I kid you not, man, it'd be like the show 24 on steroids. You could put

15:09orange

15:09clockwork in the middle of the 24 show. That's how crazy it would have gotten from June to

15:13September. And if I'm saying this, I trust that there are people in the white house and the

15:19economic team who have, you know, people who are trained in this kind of field to say, Hey, listen,

15:25this is not good. You're getting past this level. This is not. So hopefully at least I, at least I

15:31believe that all kind of made sense. And when the 10 year old got up, they just let, let's, let's

15:35get a

15:37side of the, of our history and economics. Okay. Well, I am all here for it. Yay. Okay.

15:43Let's talk about two, two things. Um, Thursday morning, so that's jobless claims. What do we see

15:48there? Jobless claims just ticked up a little bit still. Um, what we talked about since what,

15:53late 2022, Sarah, we do not want to go into the recession talk until jobless claims for a week

15:59moving average heads up toward 323,000. We said, we forced people to just believe in that principle.

16:07It's almost June, 2026, by the way, for the individual who said the U S went into the

16:12recession in October of 2026. How do you like them apples? Never happened. Have a working model

16:18that works in any case. Um, wait, wait, you said, you said somebody, somebody that's very well known

16:25said the U S went into recession on October, 2023. Oh, 2023. Okay. Yeah. 2023. So, uh, that never

16:31happened because this individual is a constant doom porn specialist and it's just absolute

16:36an abomination to everything that we stand for in economics. And it is our path to go after these

16:41people 24. We had people talking about a foreclosure crisis yesterday on X. So Sarah Wheeler, you did a

16:48wonderful job at the Meridian link conference. You took that giant picture of me with that giant,

16:53huge foreclosure chart, but you took it huge chart behind you. You took it right. When I was pointing

16:58that finger on that foreclosure data, where I say, this is their foreclosure crisis. It's not even to

17:04pre COVID levels yet. It's not even to 2005 levels yet. Homies. These people are absolutely on drugs

17:11insane in the membrane 24 seven y'all these people have lost it, man. They were like, Oh, foreclosure

17:17crisis. You know what I'm saying? You're all, you're all on drugs. There's just no way you can,

17:22you can testify to this. I digress. Any case jobless claims got up to 215,000 still very

17:28low historically. Again, the demographics of our labor force are much different now,

17:33right? That's why I always say no country has a Dorian grade labor market. We all age, retire and

17:39die, right? And in death, we need to be replaced by another consumer, another worker. So the unemployment

17:45rate can look a lot different now going out for the rest of the century, especially if labor force

17:51growth and population growth are slowing down. So jobless claims still low, picked up just 2000 more

17:57than estimates. Nothing, nothing bad there, right? New home sales came out. That was the second thing.

18:01And you know, in that article, I just highlighted, there's literally not much going on, but the new

18:06home sales data is very confusing because like the new home sales purchase application data, which the

18:12MBA has once a month, it's a post COVID highs. Like if you saw that data, like I showed that

18:18data

18:18line to people like what? Yes. Yes. But if you look at it, we're just in a back and forth

18:23channel with

18:24new home sales for years and they're just managing the market. Okay. So explain this because when I was

18:29editing the article, you explained this to me and then, and then put in writing, which I thought was

18:33really good. What you mean by that is like, we'll have something that looks like it's a multi-year high

18:39and then it's like multi-year low. Oh, and then it's multi-year high. It's like, how do you make

18:43sense

18:43for that? You, you, you, you, you just knew, I mean, new home sales and housing starts are very

18:47volatile month to month. That's how the census is. It gives you like a 16 to 18% difference that

18:53it

18:53could be revised in. But in any case, we had a multi-year high in like November of 2025. And

18:58then

18:58we had a multi-year low in January. Of course the data was like, you know, we had the snowstorm

19:03and

19:03everything and nobody was reporting BLS data for a while, but in any case, it really hasn't gone

19:08anywhere. But the problem with the builders is that that total units have completed for sale.

19:14That's the one that I always hang my hat on. And that's the one that forced me to write that

19:19article

19:19in December of 2024. Like the builders finally have a supply and demand issue because they don't

19:25really like to push the lever here with housing construction. We're still building homes. We're

19:30just not growing like some people wanted. So new home sales fell a little bit. I'm sure this number

19:35gets revised, but in any case, it really just hasn't gone anywhere. That's why I like to show

19:39those 10 year charts with new home sales. If you take the COVID bump away and you take the lows

19:45in

19:452022, which took mortgage rates from three to 7% in one year, really has done nothing. We just kind

19:53of go back and forth and the builders confidence index is not screaming. Here we go. Here we go. Yo,

19:59here we go. Sorry. In any case. You digress again. I digress. I'm thinking 80s, 90s.

20:07Then, you know, what do we think about is the builders have to just wind down that total completed

20:11units, get a little bit more demand, and then they'll feel a little bit better. And just remember

20:15that builder's confidence data that we show all the time, that's tilted to small builders. That's not

20:22the big publicly traded builders that have a lot more money, a lot more profit margins to work with.

20:26So we're just kind of stuck. And if you just look at it in the last 10 years, you didn't

20:31realize what happened in COVID in 2020. You're like, it's really gone nowhere for a very long time.

20:36Okay. Well, we are, obviously this is going to come out on Friday. And so I'll just say, wow,

20:43you could actually have a weekend, Logan, that you weren't, you know, where there weren't like hourly

20:48updates on the conflict that, that push things one way or the other. Maybe you'll have a weekend this,

20:54this weekend where you don't have to be so crazy. I'm going to have a weekend where I can play

20:58Call

20:58of Duty for about 30 minutes without checking to see what's going on in the news. And I'm going to

21:05love it, man. I'm going to love it. I don't think I'm going to have a donut this weekend and

21:10a slider,

21:10but I will get to relax, have a diet Pepsi. Treat yourself, man. You know, do the Q and A's

21:17on

21:17Instagram stories, 24 hours, write the tracker article. And maybe, maybe, maybe I'm jinxing it

21:25probably, probably, you know, it's probably going to be the wildest weekend ever, but maybe we're,

21:30we're working toward that next stage. The next stage is peace Wheeler.

21:33That could be really good. Logan, thank you so much for being on and for keeping us updated

21:38throughout this whole thing. I mean, just constantly really appreciate that.

21:41Pleasure. And by the way, for the few people that are asking, no, I am, I did not brush Jack

21:47Nicholson's teeth. That was an AI video out there. So no, the AI video of brushing your teeth,

21:54the shining note, that wasn't real people. Come on. Come on. All right. We'll talk again soon.

22:09We'll talk again soon.

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