What Will Mortgage Rates Do if the Iran Conflict Is Really Over?
Why It Matters
Understanding the limited upside of a peace deal helps borrowers and lenders set realistic expectations for mortgage pricing, while policymakers gauge the broader impact of geopolitical stability on inflation and housing markets.
Key Takeaways
- •Iran peace deal eases geopolitical risk but rates won’t drop immediately.
- •10‑year Treasury yield stabilizing around 4.45% as market digests news.
- •Mortgage rates likely stay above 6% until yields fall below 4.3%.
- •Fed remains hawkish; weaker labor data needed to push rates lower.
- •Housing demand stays resilient despite higher rates and global uncertainty.
Summary
The podcast examines how a tentative peace agreement with Iran could reshape mortgage rates, focusing on the interplay between geopolitical risk, Treasury yields and Federal Reserve policy.
Analyst Logan Mohtashami notes the 10‑year Treasury has settled near 4.45% after spiking above 4.6% during the conflict, and that mortgage rates are likely to linger above 6% until the yield drops to roughly 4.3%–4.35%. He stresses that the Fed’s hawkish stance, reinforced by recent comments from Governor Waller and the prospect of a new chair, means rate cuts are not imminent.
Mohtashami cites his own forecast—6.75% mortgage rates by 2026 if the conflict persists—and points to tighter spreads improving only modestly, with recent mortgage rates around 6.65%. He also highlights that the housing‑demand tracker shows pending sales at multi‑year highs, indicating resilience despite higher financing costs.
For borrowers, the takeaway is patience: rates will not revert to pre‑conflict sub‑6% levels this year without weaker labor data and a softer yield curve. Lenders and builders should monitor Treasury movements and Fed signals, as prolonged elevated rates could dampen demand even though current affordability remains relatively strong.
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