Will mortgage rates drop during Fed week?

Name: Will mortgage rates drop during Fed week?
Uploaded: 2026-06-16T08:00:18+00:00
Duration: 25 min 24 s
Channel: HousingWire

00:09Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about mortgage rates now

00:15that we seem to have a peace deal in place and in the midst of FedWeek. First, I want to

00:20recap

00:20the top five trending stories on HousingWire.com. And at the top is a story about HUD would permit

00:26multi-story manufactured homes without a permanent chassis. This story has been wildly popular since

00:31we published it last week. And it's closely followed by Logan's article on the topic we're

00:36discussing today, which is how much will mortgage rates fall with the Iran deal and FedWeek.

00:42Then we have the tracker why housing demand is up and inventory is down in 2026. And an update on

00:48the UWM Two Harbors deal. Lastly, our audience continues to read our coverage of Google listing

00:53ads going nationwide. Logan, welcome back to the podcast.

00:57It is wonderful to be here. A weekend with drama, but finally, something good, you know,

01:04something at least heading in the in the right direction. If they everything signed off in

01:12Switzerland on Friday, it is the end of this conflict. And then we just got to get oil flowing

01:19again. And what a journey this this has been. And we started off by saying if this thing lasts past

01:27March 21st, something went wrong. But if it goes past the second week of June, where are we?

01:34Second week of June.

01:36The second week of June.

01:37It's like the you know, we start to get to Mad Max discussion. So hopefully this is it and we

01:44can

01:45push forward with this. Right. So we got that news. Trump announced it on Sunday. It was widely

01:49expected. Right. But still need the final details. But it looks like it looks like after all of this

01:55time, we can we can count on an actual peace deal. You outlined what this meant. You know, like what

02:01does it mean a couple of weeks ago? You're like, OK, if it's over, here's what to expect with mortgage

02:06rates. And then last night you wrote a great piece that said, how low can mortgage rates go

02:11between the end of the conflict and and then with the Fed, we have to maybe competing things there.

02:16So maybe walk us through how low you think mortgage rates can fall given the end of the

02:21conflict, if at all. Not much. And and it is we sit here today. It's it's Monday morning.

02:29And what we wrote on May 25th is that if the if the conflict is over, the 10 year yield

02:35should

02:36be at 4.46 to 4.48. OK, so the bond market is saying, OK, the worst case is over.

02:45We should sit

02:46here on Sunday night. The 10 year yield fell noticeably like to 4.42, 4.43. As you and I

02:54are

02:54talking, it's 4.47. This looks very correct to me because before the conflict happened,

03:04inflation, inflation was growing hotter. But the more important thing, the labor market

03:08improved. So whatever anyone thinks about the labor market, because we have a lot of labor

03:14experts. In any case, the Federal Reserve spent a very good proportion of their time talking about

03:21their break evens. And they had said, I mean, to me, just like anything above 33000 job growth is

03:27fine for them because the growth rate of inflation is hotter. They're going, hey, listen, we're not

03:33cutting in this environment. The 10 year yield was at 4.31 before the conflict started. And then we

03:40had that one jobs report that was negative and, you know, technical levels were broken and the 10

03:45year yield got below 4 percent. Not something I agreed with, but it did. And where we are right now

03:54looks perfectly normal with the growth rate of inflation above. The worst case scenario right now

04:01has been taken off the table in terms of oil going up to 120, 150, inflation embedded, diesel,

04:07everything, Fed has to, you know, all that for now has been taken off. So now we're going to get

04:13back

04:13into the economic discussion. As long as you can get oil flowing out, it's back to, well, the growth

04:19rate of inflation is too strong. What does the Fed think neutral is now? There's no more rate cuts.

04:25Well, we're not rate hikes. But the 10 year yield, where it is today, knowing that the conflict is

04:31coming to an end, looks about right. So the best case scenario in terms of what you can look for

04:36for

04:36mortgage rates going out, especially we have to wait for the Federal Reserve and how they're going

04:41to approach things. But six and a quarter to six and a half is like the best case scenario at

04:46this

04:46point. The normal base case is six and a half to 6.75. And now, you know, to me, it's,

04:54you know,

04:54we've taken away the worst case scenario, which I outlined about 0.37 to 4.04.43% above six

05:03and a

05:04half, 6.75, excuse me. So that has been taken away. So kind of think about six and a quarter

05:09to 6.75.

05:11We're going to hang around here for a while until we get some clarity from the Fed,

05:15until we see, you know, how they look like, how they look at inflation. If the labor data started

05:21to get weaker again, that's a whole different equation, but that's not happening the first

05:25part of the year. And the Federal Reserve has a very, very low threshold on what they think is

05:30acceptable with the labor market. So I kind of wanted to get that out there because I know a lot

05:37of people just thought, oh my God, oil prices are down big, but the 10-year yield of mortgage rates,

05:42no, because the underlying economics to what drive Fed policy, which to me is 65 to 75% of what

05:49drives

05:49mortgage rates, has materially changed even before the conflict. The conflict just made it, you know,

05:57much more dicey in terms of there's no rate cuts talked now. And now we're talking about rate hikes.

06:03So we, ball is on the Fed's court and we have Kevin Warsh coming up.

06:07So, you know, it's good that the worst case has been, you know, avoided that, that you were like,

06:12listen, things are going to get really bad if it keeps going. On the other hand, sounds like

06:16pretty much more, more of the same kind of what we've had since the conflict started about those

06:21kinds of rates, which, you know, I think people can work with. It's the certainty that also helps if

06:25it's not, you know, if we're not getting dramatic headlines every day, I think that helps people run

06:30their business. Sarah, we're going to get dramatic headlines every day.

06:34Okay, but not about the conflict. Not about the conflict, but, you know,

06:40it's that line from the movie Gladiator. There's always someone to fight. There's going to be

06:44always some crazy headlines, you know, I mean, we're probably going to go back to tariffs again,

06:48stuff like this. But in any case, a little bit more kind of realistic. And it's not shocking to

06:58me what the 10-year yield is doing now, especially the Fed coming up meeting-wise. But we have to

07:05remember the dynamics shifted here because when we went into 2026, the thing was labor overinflation.

07:14If the labor data was still running at 8,000 jobs a month, it'd be different. But the labor data

07:21got

07:21better. And part of that is the first year of any trade war, things don't work right. That's always

07:25been the case. I mean, Republicans used to say this all the time, that when government gets too

07:30big and they start making rules and changing them and all this stuff, how are business supposed to

07:36operate? Yes, homies, that used to be the line all the time. Well, we had in 2018, the first trade

07:43war tap dance, we had Godzilla tariffs. So the labor data got really soft in the second half, and we're

07:49just kind of averaging out. So to me, it isn't like a big rebound, but it's just like the worst

07:56case scenario is off. And the Federal Reserve is like, if the worst case scenario is off, we're not

07:59cutting. And so we went from two to three rate cuts to now a one rate hike priced in, and

08:05what's

08:06next? And it looks about right. I mean, that's just, there has to be consequences to actions,

08:13right? So if there's no consequences, then nobody learns. But if you are complaining about higher

08:18rates, well, we did tariffs, and we did a conflict. So those things have to settle themselves out. The

08:27Federal Reserve was going to just let the tariff inflation slide off and just, you know, do the

08:33last two or three rate cuts left, you know, just to get to neutral policy. But that is no longer

08:39the

08:39case. So ball is on the Fed's court now, and Kevin Warsh is the head of the Fed.

08:43And we will see all of that on Wednesday. What happens? You know, what kind of press release does

08:48he or press conference does he hold? Does he take questions? Does he? It'll be really interesting

08:54to see how he handles this role compared to previous Fed presidents.

08:58I'm going to stay by my stance. Hashtag anyone but Warsh. But it doesn't matter what I want.

09:05People have asked you, but people have asked you why. And I thought you had some-

09:08I do not trust this man ever. And the way he looks at policy is just no. So it's just

09:15not,

09:15I don't think he's the guy for this job. But-

09:19Even though it's Warsh 2.0.

09:21He is there for one reason. He's married to the Estee Lauder's granddaughter. This is a Trump pick.

09:27This is not an ideological pick. This is a Trump pick, right? So Trump brought in him to cut rates.

09:32But now look what happened. He can't, you know, what is, how is it going to, I just,

09:37I don't trust him. And I, when I mean, I don't trust him is that if Trump is out of

09:41the white

09:41house, it's going to go back to old Kevin Warsh 1.0. And that Kevin Warsh is not very good.

09:48Okay. So for now, for everyone in the real estate, as long as Trump is in the white house,

09:56you know, he's going to be Trump's boy. He's going to do whatever he can, but this is not,

10:01you know, not my choice. I mean, Stephen Myron, the trade guy,

10:04what was he doing to the Federal Reserve? Okay. This is a government takeover of the Federal

10:08Reserve and the war made it more complicated, right? Because now all, whatever doves that

10:14were going to be on maybe Warsh's side have turned to hawks. So the growth rate of inflation has to

10:19come down, right? The whole Trinity thing that we talked about, Sarah, you and I on November 7th,

10:242024, after Trump won. If he's going to try to do this, he needs lower oil prices. The white house

10:30has said, if energy prices fall, everything will follow with it. So I might disagree on that,

10:35even myself, but still that was the game plan. And then the thing has got to get rates down.

10:39This happened. So with Warsh, he's for now he'll do Trump spitting, but I don't trust anybody who gets

10:48into this position by knowing the head guy. So, but we take it as is. And I just, it'll be

10:57interesting how he's going to massage the conversations with the Fed. The dot plots are

11:02probably going to get kicked off. He's going to make Feds not talk about policy. So it's going to

11:07be much different kind of Federal Reserve regime. But for now, for the next two years, you know,

11:12as long as Trump's in the White House, he'll do what he can to limit the rate hikes and try

11:16to cut

11:17rates as much as we possibly can. But again, it's a committee, right? As a committee, you got to

11:23rally other people to your side. And I just, he's just, he's just not that guy. But I've always been

11:30that way. So I'm not, that doesn't shock anyone. That doesn't shock anyone. Okay. Well, now let's

11:36turn to the economic data and the tracker data, because we have a one-year anniversary that just

11:42passed a very important one-year anniversary for when you said mid-June, 2025, the housing market

11:50shifted. So here we are mid-June, 2026, one year later, what shifted and where are we now?

11:56So to me, it was, it was just a basic supply and demand equilibrium discussion. This was how the

12:01tracker was designed to teach people how it really works. So they don't have to get sucked into the

12:06headlines. And because the rate variable labor over inflation, the 10-year yield was already

12:12getting to a level to where if the spreads just start improving a little bit more, like they had

12:17the previous two years, then okay, we can make this work. Because to me, housing data always improved

12:24when rates go from 6.64 down towards 6%. That's literally like, like 95% of my CNBC interviews

12:31the last three years have been the same thing. I just said, we just need near six. It could work.

12:35The data does improve. What's also happened in the last two years is that home price growth has

12:41slowed down so much that wages have outpaced it. So affordability got a little bit better now.

12:46Now, the early clue actually was in the first few months of 2025. The housing data, even with

12:54mortgage rates at 6.75 to 7.25, was holding up better than before. There's your first clue that

13:01price growth cooling down and wages made things a little bit better. So that equilibrium is there.

13:06And then our token line of last year, you know, the reports from June to October reported in July

13:12and November will shut positive year over year growth because it's doing a little bit better.

13:17But now we get past, you know, we had, we had, we had really good inventory growth. It's just that

13:22inventory growth cannot be sustained with rates under 6.64 heading towards 6%. Demand picks up a little

13:28bit. That supply and demand equilibrium changes. Our price cut percentages are now down 2% year over

13:35year. Our inventory is now down year over year, three straight weeks. Demand is positive year over

13:40year. This, even with rates going from 5.99% to 6.75. But to me, it's like in the

13:46past, it used to be

13:47when rates get above 6.64, they head above 7% and then demand gets faded out. So far that

13:53has not

13:54happened. And that's your other clue that the supply and demand equilibrium is changing because

13:59inventory is at much higher levels. This is why we like to use Florida. And as an example, Florida

14:05was already elevated, you know, higher than the national data. It already had price declines

14:11in other areas. So the supply and demand equilibrium looks, but we did, we went there in Florida in

14:16August last year. We talked about that. If the data changes, Florida will be the first. Florida's

14:22inventory has been down year over year for some time now. It's not like the U.S. data. So

14:27now we have something that we can show people how things work. This is very, very technical and

14:33economical, and it's not the most exciting thing in the world, but that's what the tracker was created

14:37to keep everyone in line to what is really happening. And last year, just plant the foot down.

14:44And if you believe in your models, Sarah Wheeler is like COVID, COVID-19 recovery model. We believe

14:49in our models, so we're gone. We're running. So now it gets a little bit more interesting.

14:55If, if hypothetically rates come back down near 6%, price growth is, you know, prices aren't taking

15:01off on a national basis. So it, that's, that's the tug of war, right? What was the chart daddy

15:08doctrine that we said at the start of the year? Tug of war, buyers versus sellers, right? That's,

15:13that's what we want. We did not want the seller market that was unhealthy, very unhealthy and

15:19savagely unhealthy. That's a much healthier marketplace. So now one year later, three straight

15:25weeks of year over year declines in inventories, three straight weeks of positive year over year

15:29weekly sales, even with rates picking up a good test case for everyone. And we just kind of move it

15:35one day at a time, one week at a time. That's what the tracker was created. Now with housing wire

15:40intelligence, because you all listen to this and you read the tracker, you can do this in your own

15:45city, zip code and everything. And that's the part of teaching, educating a society, having people

15:51read books instead of burning books, not become like the dark ages where you can't write anything

15:57down or something and not listening to YouTube and Tik TOK and Instagram fanatics. Oh my God,

16:04Instagram hurts my head. Sarah, the good thing about me is that I've gotten my Twitter account for

16:12everybody to shut up. I don't follow a lot of people. Not a lot of people talk to me because

16:16they know if they, if they get lippy, I'm going to challenge them to live debates and, you know,

16:21get out of here. You don't want to play ball, but the fact that some people are learning

16:27and that, you know, they're also telling other people, they're showing other people think about

16:31an educated society that teaches how things work. It's beautiful to watch. So one year later,

16:37everything looks normal. We always said the comps are going to be very difficult to show growth.

16:40So we're going into, it gets harder and harder up until mid June. And now we got a whole,

16:46a whole different ball game. We'll take it one day at a time, but at least now the point of

16:51the

16:51tracker is complete, right? Late 2022 to 20, or first few months of 2023, mid 2024, and now mid 2025

16:59going all the way one year. Voila, that's the framework. That's the data. All of you now understand

17:06it better. Okay. So one of the things that you track every week in the, in, in this report, in

17:10the tracker is mortgage spreads. And so we've talked about, you know, where mortgage, mortgage

17:15rates are going to be. And every week you look at, Hey, if, if the 10 year old was here

17:20and we had

17:20the same mortgage spreads of like 2023, 2024, 2025, what would it be? And it's been just really high.

17:27So those, the mortgage spreads getting better continues to keep us in that range in the sixes

17:33that you just talked about. You know, in the last decade, we just never had to talk about

17:37mortgage spreads. They were very calm. It's usually when a market event or the federal reserve gets

17:42very aggressive. Sometimes a recession, not all recessions, mortgage spreads go up, but the great

17:48financial recession in COVID it did, but 2023, like how we track mortgage spreads, uh, it got above

17:563%. That has never happened actually. And not during COVID, not during the great financial crisis,

18:01but the Silicon Valley banking crisis with the fed raising rates. It was bad. I mean, I just, I go

18:09back in time. I think about that. Just in any case, um, that got the spreads to be above 3%.

18:15That's

18:15very abnormal. So we've never would have had 8% mortgage rates back then. Uh, but now everyone

18:21could see it's mid June. You could see why the spreads were important. You can see why I was

18:25trying to teach the spreads the last three years and why that range that I have 5.75 to 6

18:31.7, I shaved

18:33off a half a percent off of my forecast from the previous year. And the previous year, we got to

18:38the

18:38seven and a quarter. The peak was seven and a quarter, but now so far this year, we've stayed within

18:43that

18:43range. And a lot of that has to do with spreads improving. I thought spreads would get toward

18:48one 80 toward the end of the year because the Freddie Fannie purchase announcement, it got down

18:53to like one 81 early, but it's just hovering around. So we're 1.99. So we're not quite back

18:58to normal, but good enough to keep things compressed and steady. And you know, again, if yields ever fell

19:05very quickly, the spreads can get worse. So if that, if something happens, let's say we have a bunch

19:09of data that's really bad and yields start to go down, that is an area where the spread gets a

19:15little

19:15bit worse because it wants to compress volatility. So, and that's why every weekend with a tracker,

19:22I show where, where would have been in 2023, where would have been in 2024, where would have been in

19:282025? If it wasn't for the spreads, we're already above 7%, you know, and we would have been near 8

19:34%

19:34in 2023. So, and now you could all see the data. It's the first real positive data curve that we've

19:39had in housing. But again, we had the snow data that impacted, we had the holidays, right? Just

19:45take those, if those two things didn't happen, it would have been a little bit more positive earlier

19:50in the year. And here we are, and we'll just take it one day at a time, one weekend at

19:54a time,

19:54one tracker at a time. The NAR is pending home sales data will come out. I'm not the biggest fan

19:59of

20:00the NAR is pending home sales because it can get very wild to the upside and to the downside.

20:04But if you just follow our weekly pending tracker data, right? And one of the things I try to teach

20:09people, I think all of you out there are putting way too much emphasis on delistings data and

20:16withdrawals. Like I think about that. I never really talk about that because in the big picture to me,

20:21it's not the biggest variable out there in the supply and demand.

20:24Okay. So, so explain that just a little bit. Delisting meaning we're seeing more in inventory

20:29because like it's affecting inventory because people are taking their listings off.

20:34Some, yes. The delistings percentage, let's say Redfin's data went from like 3.2%, but it's at an

20:41all-time high at 5, 5.8%. Okay. In the big scheme of things, that's not that important. I think

20:48a lot of

20:49doomers fought, like put so much weight on that one and they just, you know, they use that as an

20:54excuse to, well, inventory is not taking off because people are delisting their homes. They're

20:59not selling it. Yeah. Well, purchase applications positive and the weekly contracts are positive.

21:03So you're done. I do believe still, I think Redfin completely took that seller's chart away,

21:09you know? So that, that thing didn't, the model, the algorithm around that looked a little bit off,

21:15but try to think of it, how we present the tracker, right? And the spreads and the 10-year

21:20yield with demand. If demand is fading, it's very easy. Purchase application data goes down,

21:25weekly contracts go down, demand is fading, inventory increases, price cut percentage

21:30increase. The slope of the curve, why we love our slope with the curve is 2022. You saw that,

21:35right? Price cut percentages, inventory, everything was very aggressive because rates went from three to

21:40seven percent, right? But now it's a little bit different. It's very nitty gritty. So focus on

21:45the big things that matter. Try to take those little shiny objects and not make them as big as

21:51they need to be. That is good advice always. And of course, we will be talking to you about the

21:56Fed as

21:57we have a Fed day and see how all that goes. And just to note, I mean, you're hard on

22:01Fed,

22:02Fed chairs, no matter, you don't really care their political affiliation. You've been hard on

22:07Powell. Sounds like you're going to be hard on Warsh. You just have a, you have a whole different-

22:11I'm just going to say, hashtag anyone but Warsh. I don't care. Like I'm not a, I'm not a political,

22:19you know, it is interesting now because I gave up on politics a long time ago. I, let me give

22:25you my

22:25greatest story. You and I talk about this a lot. You love politics and we talk, I literally have

22:31friends that have gone to their weddings that are Republicans and Democrats. I never talked to any of

22:36them ever again. They'll go to their graves without me talking to it because they, they just, politics

22:41makes people crazy. And it's just like, and as an analyst, you don't want to become that person that

22:47well, X is president now. So I'm just going to throw away all my models and all, no, like, because

22:52I'm

22:52so detached, it's almost being unhuman. The whole Trump oil thing is really like, you know, oil prices

22:58were never really breaking high. We do these videos on Instagram trying to show charts. And I was like,

23:03you know, a lot of people just thought because they don't like him so much, there's no deal.

23:08Things are going to get worse or something. Blue Scott, blue sky. Oh my God. If you go to blue

23:13sky,

23:13they think oil is still at $140. You got to be careful of putting your ideological takes in your

23:18economic work. No matter what I think about Warsh, I have to look at it as what can possibly done

23:25under

23:26his, you know, regime change, but it doesn't change my view on where the 10 year yield I think can

23:32go.

23:32Because, because even if I didn't think somebody belonged there, I have to go what I think the,

23:37how the models work. So I might not like him, but for the real estate industry and the mortgage

23:43industry, it's better to have someone like him than let's say Powell. Powell might've been more

23:48aggressive right now with the rate, uh, uh, with rate hike discussions out there. So regardless of

23:55what I feel about person, I always stick to the economics of it. And, you know, this whole situation

24:00with the conflict and war, you could see what happened. People were just going straight into

24:04what this is very bad for the economy. It's recessions. Here we go in anything. And just

24:08not focusing on what historical data has told us about inflation spikes. If you have inflation and

24:14oil spikes without the credit breaking, it's not really recessionary. And here we are right now.

24:18If this is the end, then that's just a short blip in history.

24:21Very good. It's one of the things I really appreciate about you, even though I wish you

24:25liked to talk politics. Cause I like to talk politics, but the fact that you're just like,

24:29no, you're, you're, you really are just looking at the data.

24:32What is the first thing I ever told you about this? I'd rather take a gun and shoot myself in

24:36the thigh and be eaten by hyenas live intimately and slowly to death than to talk about politics.

24:44So that's how much I detest it, but I'm an economics guy. So whatever happens with the new

24:48Fed chair and everything, and why I've got to incorporate it into my, and let me tell you

24:53something. It's, you know, tariffs and conflicts and everything. It's a lot, right? Uh, it's not

24:59like a kind of a slow, boring government's not part of everything, you know, but we call it as it

25:05is.

25:05It doesn't matter what we think of the person left or right. We're, we're data people, nerds first.

25:10Nerds first. I love it. We'll talk again soon, Logan. Thanks again.

25:21You

Will mortgage rates drop during Fed week?

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