Sep 14, 2026 · 22 min
Oil prices put 2027 mortgage rates on a volatile path
2027 inflation and mortgage rate outlook
The episode connects energy costs, Treasury yields, inflation, and Federal Reserve expectations to the borrowing costs facing the housing market.
- 1Hotter CPI data and geopolitical conflict make the 2027 inflation and mortgage-rate outlook unusually difficult to forecast.
- 2Oil prices and the 10-year Treasury yield are shaping mortgage rates, potentially outweighing the next Federal Reserve decision.
- 3Rates could approach 6% if the federal funds rate falls, while sub-5.75% rates likely require better spreads and a softer labor market.
Don't miss
Logan Mohtashami explains why mortgage rates could approach 6% even as the federal funds rate falls, while rates below roughly 5.75% need better spreads and a softer labor market.
The brief
Logan Mohtashami argues that hotter CPI data, geopolitical conflict, and shifting Federal Reserve expectations have made 2027 unusually difficult to forecast.
The discussion turns to an unusually strong relationship between oil prices and the 10-year Treasury yield, with refined products adding pressure to the outlook.
Mohtashami says oil prices and the direction of the conflict currently matter more for mortgage rates than the next Federal Reserve decision alone.
An oil price of $125 could push yields and policy concerns higher, while falling federal funds rates could still bring mortgage rates toward 6%.
Rates below roughly 5.75% would likely require improved mortgage spreads and a softer labor market, not merely a lower policy rate.
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