What’s Going On

• The 10-Year Treasury yield closed last week below 4 % (≈ 3.98 % on October 16) and is now testing 4 % as resistance — exactly the kind of setup you want when you like lower mortgage rates.

• Technical targets pros are watching: 3.91% → 3.80% → ~3.67% (the ~3.67% level being a key support in Katie Stockton’s cloud model). If we hit those, rate sheets should keep easing.

• Builder sentiment in October ticked up: the National Association of Home Builders (NAHB) Housing Market Index (HMI) moved to 37, which is the highest since April. That’s an early sign that better-rate vibes are stirring buyer interest.

• Oil (a key inflation tailwind) — WTI is near the ~$57 mark (near cycle lows) which helps cool inflation prints that feed into mortgage pricing.

Why We’re Biased Toward Lower Rates From Here

Fed + Liquidity

Federal Reserve Chair Jerome Powell just hinted that quantitative tightening (balance-sheet runoff) may end “in coming months” to avoid 2019-style funding stress. That’s bullish for the long end (i.e., 10-yr down → mortgage rates down). Also, the market expects another rate cut at the October 28-29 meeting and likely one in December.

Macro Confirms the Drift

• Capacity utilization is sliding (deflationary pressure).

• Credit quality is wobbling at regional banks; delinquencies are inching up — classic setup for easier policy and thus lower yields.

Oil + Inflation

With oil prices low, inflation pressure eases — good for the fixed-income market and mortgage rates.

What This Means for Your Deals (Do These Today)

Lead With Payment, Not Price

With the 10-yr sub-4 %, the 30-yr fixed is drifting into the mid-6 % range. Even a modest push lower unlocks refi waves and fresh buyer urgency. For example, ARMs are creeping back (~9% of applications) which opens an angle.

Run the ARM-vs-Fixed Play

Here’s the example we’re using with clients:

• $500,000 loan

• 30-yr fixed @ 6.50 % vs 7/1 ARM @ 5.75 %

• That’s ~$242/month lower payment on the ARM versus the fixed.

• 7-year advantage: approx $26,000 total benefit (~$20K cash-flow savings + ~$6K extra principal from faster amortization).

• Even under worst-case caps the ARM stays ahead ~8+ years; using historical/fully-indexed paths, it’s ahead far longer. I’ll show this live for your listing/buyer — pricing varies.

For Listings: Add an “Affordability Snapshot”

• Create side-by-side view in your MLS/marketing: Standard 30-yr fixed vs 7/1 ARM payment.

• Optional: 2-1 buydown overlay (aka “Flex Cash”).

• Call-out box: “If 10-yr tags 3.80 %–3.60 %, payment drops another $___/mo” (I’ll supply a real-numbers table per price point).

Buyers on the Fence?

Use this script: “Window’s cracking open — rates eased, oil down, Fed easing, builder incentives up.” Then invite them for a 10-minute numbers huddle — show the payment, not the headline.

The Roadmap We’re Trading Against

• Levels to watch on the 10-yr: 3.91 % → 3.80 % → ~3.67 % → 3.60 %. If we stay below 4.00%, the path of least resistance looks down.

• Mortgage/Treasury spread: Historically, this spread (30-yr fixed vs 10-yr Treasury) runs around ~1.5-2.0%. If the spread compresses toward ~2% while 10-yr drifts lower → rate sheets follow → more showings → more “yes”.

• So: 10-yr yield falls + spread narrows = mortgage rate falls = buyer & seller activity upswing.

Write-Up for Your Team

Feel free to copy and paste the next part into your marketing/email blast:

“If you want the ARM-vs-Fixed one-pager for a specific listing (with a 2-1 buydown option and your logo), reply ‘ARM IT’ with the address & list price and I’ll turn it around same-day. Let’s make you look like the smartest agent in the room.”

Let’s go win the week.
Craig Johnson | #AskTheLoanDude

TL;DR

• 10-yr Treasury yield below 4% is a very positive sign for mortgage rates.

• Builder sentiment is improving.

• Inflation tailwinds cooling (oil sliding) = positive.

• Fed is tilting dovish.

• Use this momentum to emphasise payments, not price — run ARM vs Fixed comparisons.

• Build quick marketing slices (Affordability Snapshot) for listings.

• Invite buyers on the fence for a fast 10-minute numbers talk.