On Saturday night, the U.S. bombed Iranian nuclear sites, sending shockwaves around the world and leading people to ask me what this means for ставки по ипотечным кредитам. This type of global event can lead to significant market movements in oil prices, the U.S. dollar and the 10-year yield in the short term. However, this year, we’ve observed some unusual market pricing in reaction to events in the Middle East. Additionally, the mortgage market has been calmer this year compared to previous years.
Let’s dive in and see if we can make sense of what might happen next.
The backdrop: Calmer mortgage rates
First things first: mortgage rates have been very calm lately, even with last week featuring a significant amount of economic data, a Fed meeting, and both the President and the FHFA director calling for the Fed chairman to resign. With all these events last week, the bond market acted very mildly and mortgage rates didn’t move much either.
Overall, this year has generally had less volatility in rates compared to previous years. Here is the mortgage data from Фредди Мак, showing the range of the 30-year mortgage rate this year versus the past few years.
В моем Прогноз на 2025 год, Я ожидал следующие диапазоны:
- Ставки по ипотеке от 5.75% до 7.25%
- The 10-year yield fluctuates between 3.80% and 4.70%
The most significant volatility event this year was the introduction of the Godzilla tariffs, which caused the 10-year yield to drop below 4%. While I disagreed with the bond market’s reaction, it is ultimately the marketplace that dictates short-term moves. Mortgage spreads did worsen when the stock market entered a bear market, but the increase was only by 0.20 to 0.25 basis points. After President Trump talked about tariff delays, the stock market recovered quickly and we haven’t seen stocks go into a correction since that announcement.
Better mortgage spreads have helped
This year, the ипотечные спреды have been more favorable compared to the previous two years, which has limited how high rates can rise since spreads typically improve when the 10-year yield increases.
Regarding the 10-year yield, my forecast range for 2025, which is 3.80%-4.70%, has been mostly correct this year. We were slightly higher than 4.70% for brief time, but as I have been stressing all year, unless the labor market is breaking and we get really bad economic data, the range of 4.35%-4.70% is perfectly acceptable given Fed policy and the Fed screaming to the market that they’re modestly restrictive. Unless the economic data worsens or the Fed starts sounding dovish, this range seems right to me since they have raised their inflation expectations for this year.
The bond market’s unusual reaction to geopolitical events
Typically, geopolitical events in the Middle East tend to favor the bond market and the U.S. dollar, resulting in lower mortgage rates. However, this year has been different. For example, when Israel began its attacks on Iran on June 13, 2025, we did not see the expected reactions in the bond market or the U.S. dollar.
Given the U.S. escalation Saturday night, it’s important to monitor Sunday night trading in the markets. (Follow my Instagram page for live updates on the U.S. dollar, oil prices and the bond market.) This latest U.S. action in the Middle East may not lead to significant market movements regarding the 10-year yield and mortgage rates unless major escalations occur in the coming weeks.
Escalation will be key
Iran has announced its intention to close the Strait of Hormuz, an action I view more as a theatrical maneuver than an immediate threat. Nonetheless, we have to monitor this situation closely, as there could be potential for escalation in the coming week. If Iran chooses to de-escalate, this issue may not develop into a significant concern, akin to previous geopolitical events that have received short-term attention but didn’t manifest in larger market pricing in bonds, oil and the dollar.
An increase in oil prices or any disruption to oil exports would have negative repercussions for several economies, particularly those of Iran and China, which all depend on the Strait of Hormuz for continued operations. Moreover, if oil prices rise significantly and remain elevated for an extended period, it could pose challenges for the Federal Reserve and could influence mortgage rates.
However, much of this is speculative, as the next steps taken by Iran are beyond our control. I will be observing market movements tonight and throughout the week to gauge how investors are assessing the associated risks.
Заключение
As we have seen so often, 2025 has featured an outsized share of dramatic headlines. However, aside from the Godzilla tariffs, mortgage rates and the 10-year yield have remained notably stable within an expected range, particularly as long as economic indicators don’t suggest a recession is happening this year.
We need to closely monitor all new variables in the economy and markets, but unless there is a significant escalation in the Middle East, the focus on mortgage rates should center on the labor market and how the Federal Reserve interprets the labor data.
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