Mortgage Rates Surge to 7.5%: Are We Facing a Housing Affordability Crisis?

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3:22So let's get into it. Okay. So mortgage rate spike with the 30 year mortgage rates now hovering around 7.5 % levels unseen in decades. Are we seeing the early stages of a housing affordability crisis? I don't know. We would have to ask Matt, but given the bond crisis that I've been talking about for a while, a couple of interesting things. There's$350 billion in interest we're going to have to pay if we don't end up refinancing. And then when they had the treasury auction last week, not no one, but virtually no one wanted to buy our bonds. So as a result, I think that rate will stay for a while.

4:08If I was the Fed chair, I would not want to have this job right now. But the Japanese bond market is going through a crisis. So are we. We can talk about the bill or if Doge is being dismantled through this bill now. But there are a couple of things on the table where I'm like, I don't see how we begin to correct this. So over the next, I think they said 10 years, we're going to be paying$5 trillion in interest. I don't know how you correct that. AI is partially a small part of the answer, but we have to get this under control before we lose our lead permanently. What do you guys think? I mean, it's our highest rate since the early 2000s.

4:49I remember being in a pandemic and saying, man, 2.85, that's incredible. And now we're here at 7.5 just a few years later. it's a tough position, right? Like the affordability situation in America is becoming almost unsustainable, right? When you tell them about who's going to be buying homes, what demographic of the population is going to be coming into home buying. If wages aren't increased and housing prices going up, that doesn't make for a great formula. On the other end, when you're talking about people who are selling homes, when interest rates or even refinancing when interest rates are this high you find that people aren't doing any of those things so the supply becomes an issue affordability becomes an issue because wages are an issue um the only way i see going fit uh going forward to be fit with the situation is policy is going to have to be put in place whether it's going to be in a new declaration on how interest rates are going to be levied over a five, 10 year span.

5:55Because if we're looking at debt, like you just brought up from an institutional standpoint, but even from an individual standpoint, like the amount of debt that people are curing from college, from credit, those numbers are going to start to creep in over the next two or three years. I know it's kind of been hitting back and obviously student loan was on deferment for a few years here, but that number is going be accounted for very shortly and so when you add that into this problem housing it it's going to be an issue unless new policy is put in place like what affordable big cities are there for people to live in when the cost of housing like you said is going up so high and everything that needs to be refinanced at scale is very scary uh one more note the japanese bond auction was the worst since 1987, which is that Black Friday crash.

6:43There's a lot of things on the board right now that are just incredibly scary. And I don't know if anyone has planned correctly on how to fix it. Yeah, for sure. And I will say this when it comes to mortgages. Shout out to Matt. Shout out to Matt. Because, yeah, he's definitely a talented mortgage broker. And he's one of these people that actually does the business. Like, he's not just a social media influencer. So, like, even me, like, he's helping me out. I think I might've mentioned this before, but I actually have a property that I purchased in cash. Um, and I'm doing a cash out refi. So this is information for anybody that's interested.

7:20If you own a property, you can still refi a property that you don't have a mortgage on. Um, and the benefit with that is that you, so it's like, I got this property at auction. Um, well, kind of, it's a long story, but it was way under market value. Wait, you invested in another piece of real estate? after telling people not to invest in real estate? Shame. The Jamie Dimon play. Oh. Shame. So I was able to get a property way under market value. That's amazing. But with the cash out refi, thanks. When they do an appraisal, they appraise it at what the current price is. So long story short, if everything goes according to plan, I'm not done yet, I'll update you when it's over, but it looks like I could potentially maybe get more, slightly more, or at the very least, like around the same that I actually paid for the property.

8:14Yeah. So that's helpful because that's like, you know, if you buy a property for 280 and then it's worth 400, then you actually can get 280 back or 300 ,000, right? That's beneficial because now, I mean, of course, now you actually have a mortgage on it, so you got to pay monthly. But if you have a tenant, then they could pay that via their rent. But even if you don't, you're able to have capital that you can do other things with, deploy into the market, reinvest, buy more real estate if you're interested. So cash out refi, I don't think we spoke about that before. But that was something that I wasn't fully aware of.

8:55And he actually educated me on it. So once again, shout out to Matt. But that's a pretty powerful tool in the disposal when it comes to real estate. So you always have options when it comes to real estate. Does the interest rate become higher because of the cash out refile? Well, remember, I don't have an interest rate right now. I'm saying when you do it. It's whatever the interest rate is. It's not, it's not, it's like buying a new home. Okay. So like if it's seven and a half is the rate right now, then seven and a half is the rate that you're getting. Yeah. Okay. So yeah, Matt definitely is somebody that's extremely knowledgeable when it comes to real estate home buying.

9:28And there's so many different things, right? There's so many different stuff that we're not educated on. That's why the Home Buyers Blueprint is vitally important, EYL University. But when I found that out, I was like, damn, that's kind of crazy. Because imagine if you could just go around buying auction properties at low prices, and then doing some quick, or even fixer up, right? Then increasing their value very, very quickly, and then doing cash out refis, and then getting more money than you actually pay for it, put a tenant in there, have the tenant pay the rent, which is covering the cost of the actual new mortgage that you actually have.

10:10But now you have new money that you can buy a new property with, right? Like you can scale a, in my mind, you can scale a real estate portfolio relatively quickly in that type of scenario. Yeah, especially if you have cash or you're a higher-end-worth individual. Yeah. It's a good way to scale. yeah yeah and solid credit too right because if your credit oh yeah you gotta have credits in shambles that seven and a half is gonna look a lot higher than that well yeah i mean at this point in time nobody's credit should be in shambles you would be surprised no no i'm saying as far as the information like we have enough information out there to clean your credit right like yeah the bad credit epidemic should be coming to an end i hope so for some i got i got a few calls over the past couple of weeks um from entrepreneurs yeah i was gonna say you'd be surprised an entrepreneur class yeah and but even the other part of it is this this student alone these people who are now just graduate i know we spoke about graduating last year but i mean last episode but think about it now like the kids who have come out of college over the past two or three years who have been in deferment who've had their student loan suspended and now are having to pay what that effect will be on their credit going forward right if they default on that so yeah i mean in addition to credit card debt yeah the education process never stops man card note yep and that's a great point no matter how because you may have a plan now but as you scale and that lifestyle creep seeps in it's a lot of people that are owing 30 and 40 000 a month you'll be surprised.

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12:50Sponsored by the United States Department of Homeland Security. Hey, it's Joel. And Matt. From HowToMoney. If your New Year's resolution is to finally get your finances in shape, we've got your back. Prices, they're still high, and the economy is all over the place. But 2026 is the year for you to get intentional and make real progress. That's right. Each week we break down what's happening with your money, the most important issues to focus on, and the small moves that make a big difference. Kick off the year with confidence. Listen to How to Money on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

13:23What if mind control is real? If you could control the behavior of anybody around you, what kind of life would you have? Can you hypnotically persuade someone to buy a car? When you look at your car, you're going to become overwhelmed with such good feelings. Can you hypnotize someone into sleeping with you? I gave her some suggestions to be sexually aroused. Can you get someone to join your cult? NLP was used on me to access my subconscious. Mind Games, a new podcast exploring NLP, a.k.a. neurolinguistic programming. Is it a self-help miracle, a shady hypnosis scam, or both? Listen to Mind Games on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

14:04This is Dr. Jesse Mills, host of the Mailroom Podcast. Each January, men promise to get stronger, work harder, and fix what's broken. But what if the real work isn't physical at all? I sat down with psychologist Dr. Steve Poulter to unpack shame, anxiety, and the emotional pain men were never taught how to name. Part of the way through the valley of despair is realizing this has happened, and you have to make a choice whether you're going to stay in it or move forward. Our two-part conversation is available now. Listen to The Mailroom on the iHeartRadio app, Apple Podcasts, or wherever you get your favorite shows.

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