Why I Don't Think Mortgage Rates Are Coming Down Anytime Soon (And What It Means for East Bay Buyers and Sellers)

I get asked this question almost every week — usually by a seller hoping rates drop before they list, or a buyer waiting on the sidelines for relief. My honest answer right now: I don't see it happening soon, and here's the thinking behind that.

It Starts With The Bond Market, Not The Fed

A lot of people assume mortgage rates move whenever the Federal Reserve makes an announcement. That's only partly true. Mortgage rates actually track the 10-year Treasury yield much more closely than the Fed's overnight rate.And right now, that yield is elevated for reasons that go well beyond domestic monetary policy.The ongoing instability tied to the Iran conflict — and the pressure it's putting on global oil supply — is keeping inflation expectations higher than they'd otherwise be. When roughly a quarter of the world feels the ripple effects of disrupted energy production, that shows up in the cost to produce and ship almost everything.Inflation expectations like that don't ease because of a single headline. They ease when there's real, sustained stability.

Why A "Deal" Isn't The Same As Resolution

There was reportedly a framework on the table — peace talks paired with a substantial infrastructure investment — but agreements like that have collapsed before, sometimes over a single weekend. That fragility matters to bond markets.Investors aren't pricing in today's headlines; they're pricing in the probability that today's progress unravels next month.

"Even if the US and Iran reach something resembling an agreement, the broader region doesn't automatically stabilize. Global investors are looking at that full picture, not just one negotiation."

There's another layer most coverage misses: Israel's strategic position is a separate variable from US-Iran diplomacy. The tension with Lebanon hasn't resolved either.Until the risk premium built into global bond markets comes down in a durable way, I don't see the demand for 10-year Treasuries increasing enough to meaningfully pull yields — and therefore mortgage rates — lower.

The Domestic Wildcard

Layer on top of that the uncertainty around domestic policy, and you've got a bond market pricing in a lot of moving pieces at once.If inflation stays elevated long enough, the Fed may not just hold steady — they could be forced to raise the benchmark rate again. That would push mortgage rates higher, not lower.My view: rates stay sticky unless we see genuine, lasting de-escalation. A short-term headline won't do it. We need the underlying tension to actually resolve — and I don't think that happens in the next several months.

What This Looks Like On The Ground In The East Bay

Higher rates haven't crushed demand here the way some predicted, but they have changed its shape. We're still seeing multiple offers in certain cities and specific neighborhood pockets — often where buyers are flush with liquidity from local tech and AI company wealth.At the same time, there are other East Bay cities where comparable properties are sitting far longer than they used to.Same rate environment. Completely different outcomes — depending on the socioeconomic profile of the buyer pool. A buyer putting 50% down behaves very differently than one stretching for an 80% loan.That bifurcation is the real story of this market right now. It's not "the East Bay is hot" or "the East Bay is cold." It's both, depending on the zip code.

How We're Positioning Sellers Right Now

Given all of this, our strategy at Allure comes down to two things that matter more than ever in a selective market:Strategy 01.Aggressive, realistic pricing. In a market where buyers have more options, overpricing just means sitting. We price to reflect today's rate environment — not last year's.Strategy 02.The property has to shine. Photography, video, and copywriting all have to work together to make a home feel like the obvious choice — not just another listing.When buyers can be selective, presentation isn't optional. It's the difference between an offer and a stale listing.

Bottom Line

Until there's real, lasting stability overseas, I expect mortgage rates to remain elevated — and possibly move higher if inflation doesn't ease.That doesn't mean the East Bay market stalls. It means it gets more selective, more localized, and more dependent on how well a property performs from day one.Thinking about buying or selling in this environment? Let's talk strategy specific to your neighborhood.