Well that didn’t take long.
One day after mortgage rates finally caught a much-needed break, bond yields are right back at new 52-week highs.
The bellwether 10-year yield briefly touched 5.35% this morning, the highest level since 2002.
That means 30-year fixed mortgage rates will probably give back yesterday’s gains and possibly more.
I expect rates to climb back to around 7.60% today, which puts us back at the high end of the recent range.
Oil Is Back Above $100 (And Everyone’s Bonds Keep Selling Off)
Yesterday, I pointed to easing oil prices as the reason for the rare down day in mortgage rates.
Well, that was yesterday. Oil is back up today. Brent crude is trading above $100 a barrel again after Houthi attacks on Saudi airports and more incidents in the Strait of Hormuz.
There’s also a tropical storm headed for the Gulf Coast, and Chevron is reportedly pulling some nonessential workers off its offshore platforms.
None of this is great for inflation, which means none of it is helpful for bonds or mortgage rates.
But oil is just one part of the story.
Bond yields are climbing all over the world, with the UK 10-year gilt back above 5.4% and French yields climbing higher again too.
Meanwhile, the 10-year here briefly jumped above 5.36% to a new 52-week high.
Stocks are hurting too. The Dow was down more than 500 points this morning, a day after the S&P 500 and Nasdaq both closed at record highs.
The 10-Year Auction and Fed Minutes Could Make Things Even Worse
There are two big events this afternoon that could push bond yields even higher.
First, the Treasury is selling $39 billion in 10-year notes at 1pm EST.
Investors have already been nervous about demand for U.S. debt, so a weak showing here would signal they demand an even larger premium to hold it.
Then later at 2pm EST the Fed releases the minutes from its September meeting.
That’s when it raised its own rate a quarter point to a range of 3.75%-4.00%, the first hike since 2023.
What everyone wants to know is whether that was a one-and-done move or the first of what could be several.
Fed chair Kevin Warsh came off hawkish in September, though the data since has been softer, with a weak jobs report and a cooler-than-expected PCE reading last week.
At last glance, traders see ~20% chance of another hike this month.
Keep in mind the Fed doesn’t set mortgage rates. But the expectation of more hikes can push bond yields higher, and mortgage rates often front-run those expectations.
Home Sellers Are Cutting Prices, But Higher Mortgage Rates Offset the Benefit
Redfin recently said that the share of sellers cutting their asking prices hit a new record for this time of year.
That sounds like a sliver of good news for prospective home buyers. And obviously it is to some degree.
But the 30-year fixed averaged 7.28% in last week’s Freddie Mac survey, the highest average since November 2023 and well above the 6.34% seen a year earlier.
And as I always say, it takes about an 11% drop in home prices to match a 1% drop in mortgage rates.
So while prices might be lower in the face of higher rates, the math probably still works against the buyer unless the price drop is massive.
In addition, I’ve argued we’re just seeing another round of mortgage rate lock-in as sellers simply decide not to list. Or de-list if they’re already on the market.
Mortgage applications have now fallen five weeks in a row, and I don’t see that changing unless bond yields stop climbing.
We’ve gone from sub-6% in early March to 7.60% in about seven months. That’s painful.
If today’s bond auction goes badly and 5.35% breaks, a re-test of 8% mortgage rates in the next month or two isn’t off the table.
- Mortgage Rate Relief Lasts All of One Day - October 7, 2026
- Mortgage Rates Finally Fall, But Not By Much - October 6, 2026
- Mortgage Rate Lock-In Is Baaack - October 5, 2026