Housing Bubble Woes: Mortgage Demand Plunges, Rates Near 7%, Spread Between Mortgage Rate & 10-Year Treasury Yield Blows Out Most since Dec. 2008 and 1986 | Wolf Street

The mortgage refi business is crucial for the mortgage lenders. The largest mortgage lenders in the US – Rocket Companies, which owns Quicken Loans, United Wholesale Mortgage, which owns United Shore Financial, and LoanDepot, all have cut staff by thousands of people each, and their stocks have crashed. The entire industry is trimming back to survive. Some mortgage lenders already filed for bankruptcy. Others have shut down (read: Mortgage Lender Woes)

But the Fed’s QT has now kicked in at full pace, and this will allow the 10-year yield to drift higher. As the 10-year yield comes up faster than mortgage rates, and makes up lost ground, as QT continues, and as the Fed pauses its rate hikes next year in the 4% to 5% range to watch what happens with inflation, the spread will narrow back into the normal-ish range of about 1.5 to 2 percentage points to – just a guess – a 7.5% mortgage rate and a 5.8% 10-year yield?

Housing Bubble Woes: Mortgage Demand Plunges, Rates Near 7%, Spread Between Mortgage Rate & 10-Year Treasury Yield Blows Out Most since Dec. 2008 and 1986 | Wolf Street