We got a rare winning day for mortgage rates yesterday thanks to what seemed like renewed interest in bonds.
The global bond selloff has been brutal for mortgage rates, but at a certain point things inevitably start to look attractive.
That got me wondering if bond yields have climbed high enough to finally spark some interest.
MBS investors might be thinking 7.5% mortgage rates aren’t half-bad, especially if rates stay in a tight range and the loans don’t pay off quickly.
But this is just one hypothesis. Perhaps mortgage rates will keep rising and simply don’t move in straight line.
Have High Mortgage Rates Finally Met Resistance?
The answer right now is maybe.
The 10-year bond yield has been relentless lately, climbing day after day and taking 30-year fixed mortgage rates up with it.
It rose as high as 5.35% a handful of times over the past week, only to get turned back each time.
So it’s clear there’s some sort of technical resistance there, where bond buyers show some interest.
Of course, the pullbacks haven’t been massive. We’re still looking at a 5.25% 10-year yield, which when combined with a 225-basis point spread gives you a ~7.50% 30-year fixed, as seen in the chart above from MND.
In other words, it’s not reason to celebrate since we’re only down from the highs of 7.625%.
But it does make you wonder if bonds are finally looking attractive at these levels.
After all, earning 7% on your money is pretty good for a relatively low-risk security.
Are Bonds Finally Attractive with Yields Above 5%?
It’s starting to look that way, but one or two days doesn’t make a trend.
Just like a couple down days for mortgage rates, the trend can still NOT be our friend even if rates drift lower for a few days or even a week.
The big positive was the bond auction yesterday that drew plenty of demand and put some worries to rest.
It seemed like bonds would never stop selling off and that nobody would show up to buy them. But lo and behold, there was interest, finally.
The auction proved that there are buyers out there at these much-higher levels, and buying is exactly what you need to go get yields (interest rates) to stop climbing.
There are some folks who even believe the 10-year has already peaked, though I wouldn’t count my chickens just yet.
It’s Ultimately Still Too Early to Tell
I remember when we’d get the odd soft inflation report or weak jobs report and everyone would get excited thinking the worst was finally over.
But one report isn’t enough. Two reports aren’t even enough.
Former Fed chair Jerome Powell used to say they’d take it one meeting at a time for this reason.
You can’t have a ton of conviction from a month’s worth of data.
So to think we finally hit a peak for bond yields (and mortgage rates) would be silly.
[Try out my mortgage rate calculator to compare rates and payments side by side fast.]
No Straight Lines
At the same time, something I’ve mentioned in the past is that nothing moves in a straight line.
Mortgage rates don’t just go straight up. Nor do they go straight down.
Like all other things, be it oil prices or stock prices, they naturally ebb and flow.
After such a relentless move higher, bond yields and mortgage rates could just be taking a breather.
There is certainly some optimism that we’re getting closer to that top, but at the same time it wouldn’t shock me if after a short break, we go even higher.
Again, it will depend on what’s actually happening out there.
Oil remains over $100 per barrel, though it eased somewhat after President Trump said there’d be no fresh attacks before the midterm elections.
But what happens after that?
If it turns out to just be a delay and we keep seeing tensions rise in the Middle East, oil prices will likely keep climbing and that will keep upward pressure on mortgage rates.
So while it’s good to see some interest in bonds (and mortgage-backed securities) at these levels, you still have to keep an eye on the war and what transpires there.
Read on: How are mortgage rates set?
- Have Mortgage Rates Finally Hit a Wall? - October 9, 2026
- Mortgage Rates Stuck Near Recent Highs Despite a Strong Bond Auction - October 8, 2026
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