Mortgage Rates Edge Closer to a 6-Handle Ahead of Midterms and Jobs Report

Mortgage rates continue to build on improvement seen last week, with the bellwether 10-year bond yield now down below 4.9%.

That’s the lowest yield we’ve seen in nearly two months, driven by a big October rally in bonds.

Of course, that rally was at the cost of tech stocks, which got battered as investors performed a flight to safety out of risk and into boring, old (guaranteed to be paid) Treasuries.

Interestingly, things could get even better for mortgage rates because there are still other levers that have yet to be pulled.

That includes jobs data, which if weak could further lower mortgage rates, along with any progress on the Middle East conflict.

Oil Prices Fall on Hopes of Diplomatic Solution with Iran

It could be a very eventful week, with the midterm elections tomorrow, the jobs report Friday, a lot of other jobs data in between, and renewed Iran peace talks.

Rumblings of some sort of deal helped push oil prices down about 7% today, with Brent falling about $8 per barrel.

Secretary of State Marco Rubio said the president would like to resolve the Iranian war “diplomatically,” which would be a big departure from the aggressive talk and fears of larger strikes post-midterms.

That matters because oil has been a big driver of inflation lately, and inflation worries are what push bond yields (and mortgage rates) higher.

Of course, we’ve seen this movie before, many, many times. Only to see President Trump make threats the very next day.

So I would imagine the market is still pretty cautious any time they hear stuff like this.

But it does put the spotlight back on oil prices after weeks of focus on the AI trade and Big Tech.

And it makes me wonder if those forces work in tandem, mortgage rates could get an even bigger push lower.

[Compare five different mortgage rates and payments side by side with my mortgage rate calculator.]

Is the Worst Over for Mortgage Rates?

What a difference a month makes.

In early October, the 10-year bond yield was above 5.3% and climbed as high as 5.37%.

Today, it’s nearly 50 basis points (0.50%) lower, which is quite a 30-day swing.

Back then, there were fears the 10-year could climb to 7%, but now it seems like we worst might be behind us.

Sure, things can change, but it feels like there are more potential tailwinds for yields to drop than the inverse.

As noted, we’ve got some positive news regarding Iran, we’ve got AI that has cooled off, and we’ve got more jobs data incoming.

The fact that yields and mortgage rates seemed to top out last month tells you they could resume their trajectory seen before the war began in March.

As opposed to climbing back toward 8% as they did in late 2023.

Can Mortgage Rates Get Back to a 6-Handle This Year?

The near-term goal for mortgage rates is to build on their current downward momentum and avoid any setbacks.

The midterms could make for choppy movement this week, though the more important things continue to be the war, oil prices, and jobs data.

And aside from the monthly jobs report Friday, we have the JOLTS job openings report Tuesday, the ADP jobs report Wednesday, and weekly jobless claims Thursday.

So there is plenty of employment data to parse as the week goes on.

Assuming we can get through all of that unscathed, the 30-year mortgage could inch closer and closer to the 6s again.

At last glance, it’s around 7.25%, down from a recent high of around 7.625%.

So it’s more than halfway back to the 6s, though we’ll need to see more of the same drivers that have pushed rates off those highs.

Ideally, with less of a stock market rout and more driven by positive developments in the war

Keep a close eye on oil prices and the Iran headlines, along with the tech trade, and be aware that a lot of jobs data is coming down the pike as well.

Read on: How are mortgage rates determined?