UWM executive is optimistic that rates will ease in the second half of the year
The roller coaster ride that is 10-year Treasury yields continued on another downhill stretch on Tuesday, coming out of the Memorial Day weekend.
One week ago, the 10-year reached 4.66%, the highest mark since early 2025. In response, mortgage rates jumped again. Freddie Mac reported the 30-year fixed mortgage rate was 6.51% on Thursday.
But since then, Treasury rates have begun to fall again, fueled by hopes that the Iran conflict may end soon, and potentially some hope that the new Fed chair, Kevin Warsh, will be able to set policy in a way that eases rates later this year.
Late afternoon on Tuesday, the 10-year Treasury was down nearly 8 basis points, which is a 17-basis-point drop over the last week.
Whether the move is sustained remains to be seen. But if it holds, and if the Iran situation continues to de-escalate, it could put downward pressure on mortgage rates heading into the summer.
Brokers have been grinding through a tough stretch. Rate volatility, cautious buyers, and compressed inventory have made for a difficult market, and the question now is whether the second half of the year offers some relief.
Alex Elezaj (pictured top), EVP and chief strategy officer at UWM, thinks it does.
"At some point, look, we're going to have to get a little bit of relief on rates," Elezaj told Mortgage Professional America. "And obviously, now with the new Fed chair, maybe we'll get a little movement there. We're not too far off from the 10-year, getting close to 4%. We had a big boom in business last time that happened. So we're ready to go. It will happen."
Room for rates to drop
One issue President Donald Trump and his administration have criticized the Fed for is that many countries' central banks have far lower rates than the US. Elezaj said this could provide an opportunity to lower the Fed funds rate significantly.
“Many smart people look at the situation and say interest rates should definitely be down 100 basis points,” he said. “You can even argue 200 basis points, but I would say at least 100 basis points. When you compare it to the world in different economies and where rates are, we just have very high rates right now. The numbers and the metrics would lead you to believe that rates should be a lot lower than they are. So hopefully, he can execute on some of that stuff.”
When the 10-year briefly touched close to 4% earlier this year, refinance activity picked up sharply. A sustained move lower would bring a much larger wave, and Elezaj said his expectation is that some relief arrives within the next six to nine months.
He said borrowers are not waiting around for a return to pandemic-era lows. Most have accepted the current environment and adjusted accordingly.
"People generally have gotten pretty comfortable with this interest rate environment," he said. "When are the 2s and the 3s coming back? That's going to be a while for that, maybe, if that even happens. But we certainly believe we can be back 50 to 100 basis points lower in the next six to nine months."
The Warsh factor
Elezaj applauded the move by the Trump administration to select Warsh to replace Jerome Powell as Fed chair. Despite the headwinds awaiting Warsh, Elezaj believes the new central bank head brings a new perspective that should help pave a path for lower rates.
“It’s going to be challenging, obviously,” he said. “I think it’s a great move. He’s a smart guy with a great background. I think he’s going to do a great job. Who knows what’s going to happen, but hopefully, he sticks to what is really needed, which is taking some of the political stuff out of it. Just say, ‘Here’s the economic condition. This is where unemployment is. This is where inflation is. What do we need to be doing?’”
Part of what gives Elezaj confidence is reports on how Warsh intends to approach the role.
"From what I'm hearing, he's got a little bit of a different approach in how he's thinking about everything," he said. "Not just looking at inflation numbers, not just looking at this number. What does this combined world look like? I'm pretty confident he seems like the right guy for the job."
In the meantime, buyers have become used to a more elevated-rate environment. Elezaj said that mentality has taken hold in a way that keeps purchase activity moving regardless of where the 10-year sits.
"We talk about ‘marry the house, date the rate,’" he said. "I do believe that people are like, ‘Whether it's 6.25% or 6.5%, I'm going to get the house I want. And then in a year or two, whenever rates drop, I'll just refinance out of that and save the money then.’”
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