The 10-year Treasury yield - which directly drives mortgage rates - dropped below 4.3% on Wednesday after the ceasefire announcement. When geopolitical tension eases, bond investors get less fearful.
They buy Treasuries, which pushes yields down. Lower yields mean lower mortgage rates.
The war had created what traders call a "war premium" - a built-in cushion in rates to account for oil disruptions and economic chaos.
That premium started melting this week.
Treasury yields and oil prices are already creeping back up. The ceasefire is fragile. If diplomacy breaks down or fighting resumes, rates could spike right back.
The sticky February PCE inflation reading at 2.8% complicates things too - if the Fed grows less confident about inflation, it holds rates higher for longer.
This window of lower rates might close fast. Watch for headlines from the Islamabad talks on Friday and any oil price movement above $105 per barrel.
