“The Iran war still presents downside risks to the near-term outlook via higher energy prices, the impact on the stock market, and supply chain risks. AI has yet to have a significant impact on the labor market, but there are signs of more hiring and firing in sectors at the leading edge of AI adoption.”
Rates could be on the rise again
Upward pressure on bond yields because of inflation expectations, Weinberg suggested, could persist – and he sees a risk of mortgage rates rising by as much as 50 basis points in the event of prolonged price shocks.
That would likely be a meaningful affordability hit for potential buyers, potentially adding hundreds of dollars to monthly mortgage payments and pricing marginal buyers out of the market entirely.
Those bond yields can fluctuate dramatically from one week to the next, and positive news on the Iran war might send them lower. But for now, Weinberg said the signs are not good for mortgage rates.
“Looking at the 10-year Treasury, the market is factoring in higher inflation for longer,” he said, “which will spell bad news for many.”
