The Real Force Controlling Mortgage Rates (And It's Not the Fed) 🛢️

The clocks jumped forward and honestly, that first evening where it's still light out at 6:30pm hits different every single year. Something about that extra hour of sunlight just makes everything feel possible again.

Anyway, let's get into it. A LOT happened this week. 🌤️

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Read time: ~5 minutes

Rates ended HIGHER compared to last week, and volatility was HIGH. Rates are in the low-to-mid 6% range for most loan types without paying discount points. Paying discount points can get you into the high-5’s/low-6’s.

The Jobs Report That Should Have Sent Rates Lower

On Friday, the Bureau of Labor Statistics dropped the February jobs report and it was rough.

The U.S. economy shed 92,000 jobs in February. Unemployment ticked up from 4.3% to 4.4%. Economists had forecast a gain of around 50,000-60,000 jobs. We didn't just miss, we came in at nearly double the loss they were bracing for. December's numbers were also quietly revised down by 65,000, flipping that month negative too.

A few things drove the negative number. Health care shed 28,000 jobs due to a Kaiser Permanente strike. Federal government continued its slide, down another 10,000 in February and off 330,000 since October 2024. Manufacturing, transportation, and information all posted losses too.

So why didn't mortgage rates drop?

In a normal world, a jobs report this weak would be good news for rates. A cooling labor market signals a slowing economy, which gives the Fed room to cut, bonds rally, and mortgage rates move lower.

That's not what happened. Oil prices are the culprit. Crude surged nearly 7% ahead of Friday, driven by escalating Middle East tensions. Rising oil means rising inflation expectations, and inflation expectations are kryptonite for mortgage rates. Before the jobs report even hit, rates were already on track to end the week at their highest levels in several weeks because of the oil spike. The weak jobs number essentially kept rates from blowing up further rather than pushing them lower. As HousingWire's Logan Mohtashami noted, if the Iran conflict hadn't happened, we would have lower mortgage rates after this jobs report.

What Does This Mean For You?

For agents, buyer confidence gets fragile when job loss headlines are flying. Last week, Kreg and I had a buyer call us the day before closing to inform us he lost his job. If the job market continues to weaken, your pre-approved buyers may be affected. Check in with your pipeline, especially those in sectors showing losses like tech, federal government, and healthcare.

For lenders, a weakening labor market builds the case for the Fed to cut rates later this year. Inflation is still sticky, but if employment keeps softening, the Fed's hand may eventually get forced cut rates soon 👀. The next jobs report drops April 3rd.

The Real Force Controlling Mortgage Rates (And It's Not the Fed) 🛢️

Everyone watches Jerome Powell (chair of the Federal Reserve) speak, the internet melts down, agents text their LOs, and buyers hold their breath.

But this week was a reminder of something most people in real estate never think about: oil has more day-to-day control over mortgage rates than the Fed does.

Let me explain.

American crude oil settled at $90.90 a barrel on Friday, up 36% from just one week ago. That is an extraordinary move in an extraordinarily short time and as of Monday morning, oil futures were already positioned to open the day above $100 a barrel. The culprit is the Strait of Hormuz, a narrow waterway between Iran and Oman that most Americans couldn't find on a map but that quietly controls the flow of roughly 20% of the world's daily oil supply.

Following joint U.S. and Israeli strikes on Iran, the Islamic Revolutionary Guard Corps (IRGC) officially declared the strait closed. Tanker traffic dropped to near zero, with over 150 ships stranded outside the strait unable to safely pass. When that much oil can't move, prices don't just nudge higher. They explode.

On Friday, the Trump administration announced a $20 billion reinsurance program, designed to cover war-related losses for vessels transiting the Persian Gulf. The idea is simple: private insurance providers aren’t going to cover vessels attempting to make it through the straight since its an active warzone. No insurance means no ships, no ships means no oil, and no oil means prices keep climbing. However, analysts say tankers are unlikely to start moving again until the physical security situation improves.

Here's why that matters more to your buyers than anything Powell said at his last press conference.

Oil controls inflation. Inflation controls rates.

The Fed sets one rate: the overnight lending rate between banks. Mortgage rates are set by bond markets, and bond markets are obsessed with inflation. When oil spikes, everything downstream gets more expensive. Gas, shipping, manufacturing, groceries. Inflation expectations rise. Bond investors demand higher yields to compensate. And just like that, mortgage rates go up.

No Fed meeting required.

Persistently higher oil prices are now threatening the interest rate policy of major central banks including the Fed, limiting their scope to cut rates in the coming months. Think about that. A waterway 7,000 miles away just put the brakes on rate cuts that were being priced into the market just weeks ago.

So what do you do with this?

Watch oil the same way you watch the Fed. When you see oil prices spiking, don't be surprised when your rate sheet gets worse the next morning. And when the Middle East tensions eventually cool and oil comes back down, that's your window. Rate improvement tends to follow, sometimes fast.

The Phone Call Nightmare Is Finally Over 🙌

If you've ever watched a client apply for a mortgage and then get bombarded with calls and texts from lenders they never contacted, you know exactly how damaging trigger leads have been to our industry.

Here's how it worked. The moment a buyer authorized a credit pull, the credit bureaus sold that inquiry data to competing lenders, often within hours. Your client would suddenly be fielding over 100 unsolicited contacts in a single day from people they'd never heard of.

That practice is now federally banned. Effective March 5, 2026, the Homebuyers Privacy Protection Act prohibits consumer reporting agencies from furnishing trigger leads unless the creditor already has an existing financial relationship with the consumer, or the consumer has explicitly opted in.

Buyers can still add extra protection. Visit OptOutPrescreen.com or call 1-888-567-8688 to opt out of prescreened offers. Register at DoNotCall.gov to cut down unsolicited calls. And a credit freeze with all three bureaus locks things down completely, just remind clients to unfreeze before their mortgage application.

Agents, bring this up at your next buyer consultation. It builds trust and shows you're paying attention to things that actually affect their experience.

Instagram Reels from the Week

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Don’t hesitate to reach out if you need anything at all. Have a wonderful week!