The Fed’s new “neutral interest rate” could mean pricier mortgages, less cash flow, and higher home prices for longer. After the great financial crisis, interest rates were kept in check, slowly sliding down for over a decade. But, since the pandemic, things have gone the opposite way. Mortgage rates have hit multi-decade highs, bond yields have crossed new territory, and we could be far from things returning to “normal.”
If you want to know the math behind the mortgage rates and understand what the Fed does (and doesn’t) control in a high-rate world, Redfin’s Chen Zhao can break it down for you. In this episode, Chen goes through the economic indicators tied to mortgage rates, how bond yields affect banks’ lending power, why the ten-year treasury is at a historic high, and the Fed’s newest “neutral interest rate.”
We’ll also get into the potential effect of next year’s presidential election on mortgage rates and the housing market and what to look for to gauge where we’re headed. If you want to know where interest rates will go, Chen details the roadmap in this episode.
Dave:
Hello, everyone, and welcome to On The Market. I’m Dave Meyer. Joined today by Henry Washington. Henry, I heard a rumor about you today.
Henry:
Uh-oh. This can’t be good. Or maybe it is. I don’t know. Go for it.
Dave:
It’s good. I heard you finished your book.
Henry:
I finished the first half of my book. I’m still working on it.
Dave:
Okay.
Henry:
Still working on it.
Dave:
Show us how much attention I was paying in that meeting.
Henry:
We finished the first half of the book. We’re working on the second half of the book. We’ve got it all transcripted out, but we’ve got some more details to put in there.
Dave:
Well, the team at BiggerPockets Publishing seemed very pleased about your book and that things were coming in on time. It sounds like a great book. What’s it about?
Henry:
It is about finding and funding your real estate deals. Great book for…