Latest / Earn Your Leisure / Mortgage Rates Surge to 7.5%: Are We Facing a Housing Affordability Crisis?

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Mortgage Rates Surge to 7.5%: Are We Facing a Housing Affordability Crisis? · Earn Your Leisure

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• 1:51
  Speaker 2: So let's get into it. Okay, So mortgage rake spike,
• 1:56
  Speaker 2: with the thirty year mortgage rates now hovering around seven
• 2:00
  Speaker 2: point five percent, levels unseen in decades, are we seeing
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  Speaker 2: in the early ages the early stages of a housing
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  Speaker 2: affordability crisis?
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  Speaker 3: I don't know we would have to act, Matt, but
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  Speaker 3: given the bond crisis that I've been talking about for
• 2:15
  Speaker 3: a while, a couple interesting things. There's three hundred and
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  Speaker 3: fifty billion dollars in interest we're going to have to
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  Speaker 3: pay if we don't end up refinancing and then when
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  Speaker 3: they had to treasury auction last week, not no one,
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  Speaker 3: but virtually no one wanted to buy our bonds. So
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  Speaker 3: as a result, I think that rate will stay for
• 2:36
  Speaker 3: a while. If I was a fair chair, I would
• 2:39
  Speaker 3: not want to have this job right now. But the
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  Speaker 3: Japanese bond market is going through a crisis, so are we.
• 2:48
  Speaker 3: We can talk about the bill or if Doe just
• 2:51
  Speaker 3: being dismantled through this bill now, But there are a
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  Speaker 3: couple of things on the table where I'm like, I
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  Speaker 3: don't see how we begin to correct this. So over
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  Speaker 3: the next I think they said ten years, we're going
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  Speaker 3: to be paying five trillion dollars in interest. I don't
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  Speaker 3: know how you correct that. AI is partially of a
• 3:08
  Speaker 3: small part of the answer. But we have to get
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  Speaker 3: this under control before we lose our lead permanently. What
• 3:14
  Speaker 3: do you guys think.
• 3:16
  Speaker 1: I mean, it's our highest rate since the early two thousands.
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  Speaker 1: I remember being in the pandemic and saying, man, two
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  Speaker 1: point eight five, that's incredible, and now we're here at
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  Speaker 1: seven and a half just a few years later. It's
• 3:27
  Speaker 1: a tough position, right, Like the affordability situation in America
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  Speaker 1: is becoming almost unsustainable. Right when we're telling them about
• 3:37
  Speaker 1: who's going to be buying homes, what demographic of the
• 3:39
  Speaker 1: population is going to be coming into home buying. If
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  Speaker 1: wages aren't increased in housing prices going up doesn't make
• 3:48
  Speaker 1: for a great formula. On the other end, when you're
• 3:50
  Speaker 1: talking about people who are selling homes when interest rates
• 3:54
  Speaker 1: or even refinance, and when interest rates are this high,
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  Speaker 1: you winding that people aren't doing any of those things.
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  Speaker 1: So the supply becomes an issue. Affordability becomes an issue
• 4:03
  Speaker 1: because wages are an issue. The only way I see
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  Speaker 1: going fit going forward, to be fit with the situation
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  Speaker 1: is policy is going to have to be putting in place,
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  Speaker 1: whether it's going to be a new declaration on how
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  Speaker 1: interest rates are going to be levied over a five
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  Speaker 1: ten year span, because if we're looking at that, like
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  Speaker 1: you just brought up from an institutional standpoint, but even
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  Speaker 1: from an individual standpoint, like the amount of debt that
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  Speaker 1: people are curing from college from credit, those numbers are
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  Speaker 1: going to start to creep in over the next two
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  Speaker 1: or three years. I know it's kind of been hitting
• 4:39
  Speaker 1: back and obviously soon Loan was on deferment for a
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  Speaker 1: few years here, but that number is going to be
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  Speaker 1: accounted for very shortly, and so when you add that
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  Speaker 1: into this problem housing, it's going to be an issue
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  Speaker 1: unless new policy is put in place, like what.
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  Speaker 3: Affordable big cities are there for people to live in.
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  Speaker 3: When the cost of housing, like he said, it's going
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  Speaker 3: up so high and everything that needs to be refinanced
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  Speaker 3: at scale, it's very scary. One more note, the Japanese
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  Speaker 3: bond auction was the worst since nineteen eighty seven, which
• 5:10
  Speaker 3: is that Black Friday crash. There's a lot of things
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  Speaker 3: on the board right now that are just incredibly scary,
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  Speaker 3: and I don't know if anyone has planned correctly on
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  Speaker 3: how to fix it.
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  Speaker 2: Yeah, for sure. And I will say this when it
• 5:23
  Speaker 2: comes to mortgages, shout out to Matt Matt, because Yeah,
• 5:28
  Speaker 2: he's definitely a talented mortgage broker, and he's one of
• 5:31
  Speaker 2: these people that actually does the business like he's not
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  Speaker 2: just a social media influencer. So like even me, like
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  Speaker 2: he's helping me out. I think I might have mentioned
• 5:39
  Speaker 2: this before, but I actually have a property that I
• 5:41
  Speaker 2: purchased in cash and I'm doing a cash out refly.
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  Speaker 2: So this is information for anybody that's interested. If you're
• 5:50
  Speaker 2: own a property, you can still refi a property that
• 5:52
  Speaker 2: you don't have a mortgage on, and the benefit with
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  Speaker 2: that is that you so it's like I got this proper,
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  Speaker 2: but he had auction. Well kind of it's a long story,
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  Speaker 2: but it was way under market value.
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  Speaker 3: Well, you invested in another piece of real estate after
• 6:08
  Speaker 3: telling people not to invest in real estate, the.
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  Speaker 2: Jamie Diamond play. So I was able to get a
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  Speaker 2: property way under market value, but with the cash out refit. Thanks.
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  Speaker 2: When they do an appraisal, they appraise it at what
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  Speaker 2: the current price is. So, long story short, if everything
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  Speaker 2: goes according to plan, I'm not done you. I'll update
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  Speaker 2: you when it's over. But it looks like I could
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  Speaker 2: potentially maybe get more, slightly more or at the very
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  Speaker 2: least like around the scene that actually paid for the property. Yeah,
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  Speaker 2: so that's helpful because that's like, you know, if you
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  Speaker 2: buy a property for to eighty and then it's worth
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  Speaker 2: four hundred, then you actually can get to eighty back
• 6:54
  Speaker 2: or three hundred thousand. Right, That's that's beneficial because now
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  Speaker 2: I mean, of course you now you actually have a
• 7:01
  Speaker 2: mortgage on it, so you got to pay monthly. But
• 7:03
  Speaker 2: if you have a tenant then they could pay that
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  Speaker 2: via their rent. But even if you don't, you're able
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  Speaker 2: to have capital that you can do other things with
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  Speaker 2: deploying to the market, reinvest, buy more relitated if you're interested,
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  Speaker 2: So cash your refin I don't think we I don't
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  Speaker 2: think we spoke about that before, but that was something
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  Speaker 2: that I wasn't fully aware of and he actually educated
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  Speaker 2: me on it. Once again, shout out to Matt. But
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  Speaker 2: that's a pretty powerful tool in the disposal when it
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  Speaker 2: comes to real estate. So you always have options when
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  Speaker 2: it comes to real estate.
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  Speaker 1: Just does the indust rate become higher because of the
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  Speaker 1: cash youll refle.
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  Speaker 2: Well, remember I don't have an interest rate right now,
• 7:39
  Speaker 2: because when you do it, it's whatever the interest rate is.
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  Speaker 2: It's not it's not it's like it's like buying a
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  Speaker 2: new home.
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  Speaker 1: Okay, So like if it's seven and a half is
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  Speaker 1: the rate right now, then seven and a half is
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  Speaker 1: the rate that you're getting.
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  Speaker 2: Yeah, okay, So yeah, yeah, Matt definitely is somebody that's
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  Speaker 2: extremely knowledgeable when it comes to real estate home buying,
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  Speaker 2: and there's so many different things, right, Like, there's some
• 8:00
  Speaker 2: different stuff that we're not educated on. That's why the
• 8:03
  Speaker 2: home Boy blueprint is vitally important Eyo University. But that
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  Speaker 2: when I found that out, I was like, damn, that's
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  Speaker 2: kind of crazy, like because imagine if you could just
• 8:12
  Speaker 2: go around buying auction properties at low prices, then doing
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  Speaker 2: some quick or even like fix her up right, then
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  Speaker 2: increasing their value very very quickly, and then doing cash
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  Speaker 2: out refiles and then getting more money than you actually
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  Speaker 2: paid for it. Put a tenant in there, have the
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  Speaker 2: tenant pay the rent, which is covering the cost of
• 8:36
  Speaker 2: the actual new mortgage that you actually have. But now
• 8:39
  Speaker 2: you have new money that you can buy new property with. Right,
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  Speaker 2: Like you can scale a relative in my mind, you
• 8:45
  Speaker 2: can scale a real estate portfolio relative relatively quickly in
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  Speaker 2: that type of scenario.
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  Speaker 3: Yeah, especially if you have cash or you're a high
• 8:53
  Speaker 3: network individual.
• 8:54
  Speaker 2: M Yeah, it's good.
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  Speaker 3: It's a good way to scale.
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  Speaker 1: Yeah, and solid credit too, because if your credit, oh yeah,
• 9:01
  Speaker 1: you gotta have credits in shambles, seven and a half's
• 9:04
  Speaker 1: gonna look a lot higher than that.
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  Speaker 2: Well you're I mean, at this point in time, nobody's
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  Speaker 2: credit should be in shambles. You would be surprised. No, No,
• 9:14
  Speaker 2: I'm saying as far as the information like we have
• 9:18
  Speaker 2: enough information out there to clean your credit, right, Like
• 9:23
  Speaker 2: the bad credit epidemic should be coming to an end.
• 9:26
  Speaker 1: Oh so for some I got I got a few
• 9:28
  Speaker 1: calls over the past couple of weeks from entrepreneurs.
• 9:32
  Speaker 3: Yeah, I was gonna say, you would be surprised at
• 9:35
  Speaker 3: the entrepreneur class. Yeah.
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  Speaker 1: And but even the other part of it is this
• 9:39
  Speaker 1: this student loan, these people who are now just graduate.
• 9:42
  Speaker 1: I know we spoke about graduating last year, but I
• 9:45
  Speaker 1: mean last episode. But think about it now, like the
• 9:47
  Speaker 1: kids who have come out of college over the past
• 9:50
  Speaker 1: two or three years, who have been in deferment, who
• 9:52
  Speaker 1: had their suit of loan suspended and now are having
• 9:55
  Speaker 1: to pay what that effect will be on their credit
• 9:58
  Speaker 1: going forward, right if they default on So yeah, I
• 10:01
  Speaker 1: mean in addition to credit card that, Yeah, the education
• 10:04
  Speaker 1: process never stops.
• 10:05
  Speaker 3: Man card no, yep. And that's a great point no
• 10:08
  Speaker 3: matter how, because you may have a plan now, but
• 10:10
  Speaker 3: as you scale and that lifestyle creep seeps in. It's
• 10:15
  Speaker 3: a lot of people that are owing thirty and forty
• 10:18
  Speaker 3: thousand dollars a month. You'll be surprised.
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