A 44-year industry veteran says conditions in the US lending market are deteriorating faster than most expect
A sharp climb in mortgage rates and bond yields is creating conditions that could force more lenders out of the US market, threatening to deepen a supply squeeze that homebuyers can ill afford.
That is the warning from Melissa Cohn, Regional Vice President at William Raveis Mortgage in New York. For Cohn, the central question is not when rates might ease, but how much structural damage the current environment inflicts on the lending market before they do.
"I think that's the 800-pound gorilla," she said. "What damage is there going to be to the lending industry?"
Michael Brenning, chief operating officer at eLend, says rapid swings in Treasury yields are forcing lenders to reprice multiple times a day, disrupting rate locks, increasing operational pressure, and adding another layer of uncertainty for borrowers. https://t.co/uq8yZ4wEqP
— Mortgage Professional America Magazine (@MPAMagazineUS) October 5, 2026
Lenders sounding the alarm
Treasury yields have surged to levels not seen in roughly two decades, and mortgage rates have tracked higher in step.
Bond markets steadied on Monday after last week's sharp moves, with Treasury yields ticking higher as investors weighed incoming economic data and awaited the Federal Reserve's September meeting minutes.
The 10-year note traded up around 2 basis points at 5.298%, and the 30-year bond rose 3 basis points to 5.659%. The 2-year yield bucked the trend, falling close to 1 basis point to settle at 4.818%.
The Mortgage Bankers Association (MBA) noted that 30-year mortgage rates moved more than 30 basis points higher over recent weeks as longer-term yields absorbed inflation pressures.
Cohn says the response from some lenders has been preemptive.
"Banks seem to be panicking about the direction of mortgage rates and prophylactically raising rates, even if they don't have to, just to get out of the fray," she said.
"We're going back to a period like in 2022, when rates went up precipitously, and we saw some lenders going out of the market."
Brian Mozley, Chief Growth Officer at Choice Mortgage Group, previously told Mortgage Professional America that rising economic uncertainty had made the environment harder for buyers and brokers on both sides of the deal.
"There's a lot of uncertainty in the market today, and what really benefits us is having more control over the process — through technology, people, and effective communication — to make things smoother for the buyer," Mozley said.
For brokers, fewer active lenders mean less product variety, diminished pricing competition, and less room to find creative solutions for clients.
“We’re dealing with a lending environment that has gotten very sensitive, and perhaps there’s been some big damage over the course of the past few months in terms of where bond yields have gone and the hysteria in the market. But I think that we will potentially watch people and lenders fall out of the marketplace, and that’ll cause even more damage,” Cohn said.
Buyers going quiet
The effects are reaching borrowers faster than many professionals anticipated. Until recently, buyers had largely absorbed unfavorable data with composure. That is changing.
"Up until about a few days ago, I would say that most buyers were saying, 'Yeah, I know. I saw the bond yields; they're terrible,'" Cohn said.
"But I'm telling you, my phone — today's the quietest day I've had in a long time."
Cohn was clear about the downstream effect for anyone still looking to borrow.
"When you find yourself in a marketplace where lenders don't want to lend, and if they are willing to lend, they'll do it at an even higher price," she said.
"That adds even more collateral damage to the real estate market."
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