Episode 100: 7% Mortgage Rates?! What This Means for Retirees

Now this is back from September 16th.

This was in The Wall Street Journal.

It says, "Housing market's new test: the 7% mortgage." Um, now Matt, what happens when mortgage rates go up?

Um...

Not a trick question.

[laughs] You know, I mean, just the cost of living goes up.

Makes it harder for new homebuyers-

Well-

... to get homes.

Okay.

So what happens in the economy broadly as, as mortgage rates go above 7%?

Well, then other interest rates are also rising.

Well, I'm, I'm thinking...

I'm, I'm, I want you to m- read my mind.

What happens to the broader economy as inter- as, uh, mortgage rates go higher, above 7% now, so fewer folks are buying homes?

Well, mortgages are also increasing.

Cost of living.

Well, okay, so I'm gonna spell it out.

Fewer, uh, home, home starts, new home starts.

Fewer new home starts, fewer, um, housing sales or, uh, move up, you know, a lot, lot less people move up in house when they've been waiting for lower rates so they can go to a...

Um, you know, if you've got a low interest rate.

So say you've got a 2.5% interest rate and the new mortgages are being often at s- offered at 7%, so you're not gonna sell your old house if you still have a mortgage on it and move up to a more expensive house.

Right, not a chance.

Yeah.

Not, not...