Oil Prices Cooled Down. Mortgage Rates Did Not Fully Follow.

That is the part Bay Area buyers should pay attention to.

Last month, I wrote about how oil volatility and global conflict headlines were quietly adding pressure to housing costs. Since then, oil has taken a wild round trip. WTI crude climbed above $110 earlier this month, then pulled back to around $94.88. But the 10-year Treasury is still hovering around 4.306%, which helps explain why borrowing costs have not fully relaxed yet.

So the question is simple:

If oil has cooled, why haven’t borrowing costs relaxed more?

Mortgage Rates Do Not Move One-for-One With Oil

Mortgage rates do not always move in a straight line with the headline number you see on oil. Markets react quickly when risk rises, but they often take longer to fully calm down. Once inflation concerns enter the bond market, investors may still demand higher yields even after the immediate headline pressure fades.

The key number I am watching is not just oil. It is the 10-year Treasury yield.

The Fed Matters, But It Does Not Directly Set Mortgage Rates

A lot of buyers assume mortgage rates move mainly because of the Fed, but that is only part of the story. The Fed controls short-term rates. The 30-year fixed mortgage is more closely tied to the 10-year Treasury, which is market-driven.

A simple way to understand it is:

30-year fixed mortgage rate ≈ 10-year Treasury yield + 1.5% to 2% spread

That is why the current market feels a little frustrating. Oil has cooled from the most dramatic headlines, but the 10-year Treasury is still holding near recent levels. In other words, the energy shock faded, but the rate impact has not fully gone away yet.

Why This Matters in the Bay Area

For Bay Area buyers, this matters because prices are already high. In places like San Francisco, San Jose, San Mateo, Daly City, Millbrae, and Fremont, even a small rate move can change the monthly payment, the loan amount, and the strength of an offer.

For sellers, this matters too. When borrowing costs stay sticky, buyers become more payment-sensitive. That does not mean demand disappears, but it does mean pricing, presentation, and negotiation strategy matter more.

My Takeaway

Do not just watch the headlines. Watch how the bond market reacts after the headlines.

Oil dropping back under $95 is good news, but the 10-year Treasury staying around 4.3% tells us buyers are not getting full relief yet. In the Bay Area, timing is not just about finding the right home. It is also about understanding what your payment looks like before the market shifts again.

Talk to me before your next move, timing matters.