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

**Rashad Bilal** (0:00)
So, let's get into it. Okay, so mortgage rates spike. With the 30-year mortgage rates now hovering around 7.5 percent, levels unseen in decades, are we seeing the early stages of a housing affordability crisis?

**Ian Dunlap** (0:19)
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. If 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?

**Troy Millings** (1:24)
I mean, it's our highest rate since the early 2000s. I remember being in the 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 are 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.
The only way I see 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 a new declaration on how interest rates are going to be levied over a five, ten year span. Because 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 procuring from college, from credit, those numbers are going to start to creep in over the next two or three years. I know it's been hitting back and obviously student loan was on deferment for a few years here. But that number is going to be accounted for very shortly. So when you add that into this problem, housing, it's going to be an issue unless new policy is put in place.

**Ian Dunlap** (3:03)
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. One more note, the Japanese bond auction was the worst since 1987, which is that Black Friday crash. There'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.

**Rashad Bilal** (3:29)
Yeah, for sure. I will say this when it comes to mortgages. Shout out to Matt.
Yeah, he's definitely a talented mortgage broker, and he's one of the people that actually does the business. He's not just a social media influencer. So even me, he's helping me out. I think I might have mentioned this before, but I actually have a property that I purchased in cash, and I'm doing a cash out refi. So this is information for anybody that's interested. If you own a property, you can still refi a property that you don't have a mortgage on. And the benefit with that is that you... So it's like I got this property at auction. Well, kinda, it's a long story, but it was way under market value.

**Ian Dunlap** (4:14)
Wait, you invested in another piece of real estate after telling people not to invest in real estate?

**Troy Millings** (4:20)
Shame.

**Rashad Bilal** (4:20)
The Jamie Diamond play. Oh.

**Troy Millings** (4:24)
Shame.

**Rashad Bilal** (4:24)
So I was able to get a property way under market value.