09/26/2026
I’ve found greater success in educating my clients and working along side them to make informed decisions rather than making decisions for them…
So, throughout this year I’ve spent a TON of time researching mortgage rates. Not just where they’re at, but WHY they’re there and what could potentially happen and allow YOU 🫵🏻 to, without a doubt, know when YOU’RE ready to make the “move!”
HERE WE GO!
The more I read, the more I feel like there’s a little bit of “sleight of hand” going on…
Look over here, but don’t pay too much attention to what’s happening over there. 🤷🏼♂️
We hear about the Fed every time mortgage rates move. Rates go up? Blame the Fed. Rates might come down? Everyone waits on the Fed. Well… I’ve been hearing Washington somewhat fueling this narrative
I’ve said it many times before… The Fed DOES NOT directly set mortgage rates.
They absolutely influence them, but a 30-year mortgage is long-term debt. Treasury yields, inflation expectations, the bond market, mortgage-backed securities, economic growth and what kind of return investors are willing to accept all play into it.
So I started backing up and looking at this from more of a 30,000-foot view.
And I kept coming back to something that I don’t think is getting enough attention:
Data centers and AI infrastructure.
There’s more than $1.5 TRILLION in announced data-center projects out there right now, and only a fraction of that investment has actually happened yet.
Think about what it takes to build all of that.
Money. A LOT of it.
Then electricity, construction labor, equipment, semiconductors, software, land, infrastructure, etc.
Even the Federal Reserve has acknowledged that the AI/data-center boom is creating upward price pressure in some of these areas.
Now, I’m NOT saying data centers are the reason your mortgage rate is 6% or 7%. That would be way too simple.
What I AM saying is that all of this is connected.
Massive amounts of investment create demand. Demand can create inflationary pressure. Inflation matters to long-term investors because if I loan you money for 30 years, I need enough return to make up for the fact that the dollars you pay me back with 20 or 30 years from now won’t buy what they buy today.
That affects Treasury yields.
That affects what investors require from mortgage-backed securities.
And THAT affects mortgage rates.
So while everyone is staring at the Fed, I think there’s a much bigger economic picture worth paying attention to.
Then we get to what I think is one of the biggest problems in housing right now…
People are STUCK.
Roughly half of outstanding mortgages are still at 4% or lower, and nearly 80% are below 6%.
Put yourself in that homeowner’s shoes.
You bought or refinanced at 2.75% or 3%. You’d like a bigger house, smaller house, different location, more land, whatever…
But moving might mean trading that 3% mortgage for something around twice that rate.
So what do you do?
You stay home and watch Netflix. 😂
And that creates a weird problem.
You’re not selling your house, so that’s one less house for somebody else to buy.
But you’re also probably not buying another house, so that’s one less buyer too.
That’s the “lock-in effect,” and it’s VERY real.
Now this is where I’ll separate the research from MY OPINION.
I think at some point the government is going to feel pressure to do something to get those people moving again.
Maybe it’s a subsidy. Maybe it’s some type of mortgage incentive. Maybe it’s something completely different that nobody has proposed yet.
I don’t know.
And to be clear, I haven’t found anything saying some big federal program like that is definitely coming.
That’s MY prediction.
But we’ve seen government step in when barriers to homeownership and mortgage lending become a problem before.
FHA is a good example.
When FHA was created in the 1930s, mortgages were nothing like what we’re used to today. Financing could cover only around half the property’s value, loan terms could be just a few years, and borrowers could face a balloon payment at the end.
FHA mortgage insurance helped shift some of that lending risk and made longer-term financing available to more people.
USDA programs also reduce the barrier for qualifying rural buyers today by allowing eligible borrowers to finance 100% of a home’s purchase price while the government guarantees a portion of the lender’s potential loss.
And before somebody takes that the wrong way…
I’m NOT saying FHA or USDA buyers shouldn’t own homes. But we must admit government backed programs are giving permission for people
Into the market because the market, for good reason, didn’t let them.
What I’m saying is that whenever we lower a natural barrier to entering a market, the risk doesn’t magically disappear.
It moves.
And that’s the part I think we need to talk about more.
If someone can’t afford a certain down payment, we can create a program that reduces that barrier.
If someone can’t afford today’s mortgage rate, we could theoretically subsidize that too.
But at what point are we actually fixing affordability…and at what point are we just creating more purchasing power to chase the same houses?
Because if you increase demand without increasing supply enough to meet it, what happens?
Prices tend to feel that pressure.
And THAT is where I start getting concerned about constantly trying to “fix” markets.
Government intervention doesn’t automatically equal inflation. Economics isn’t that simple.
But government intervention can absolutely create unintended consequences.
Imagine we eventually create some program that makes it easier for somebody to leave their 3% mortgage and purchase another house at today’s rates.
Great. We got them moving again.
But now we potentially created another buyer with additional purchasing power.
If housing supply doesn’t increase enough along with it, did we fix affordability?
Or did we just move the problem?
That’s why I don’t necessarily believe every market correction needs to be prevented.
Markets cycle.
They HAVE to.
Things get expensive. Investment moves somewhere else. Prices adjust. Opportunity comes back. Money moves again.
Sometimes that process sucks. 😂
But that’s also how markets find balance.
I’m not predicting some giant housing crash next spring. I don’t know that, and neither does anybody else.
What I AM watching is how long we can continue trying to keep every wheel turning without allowing normal market adjustments to happen.
Because eventually something has to give.
So when politicians, from EITHER side, start telling us how they’re going to “fix” housing, lower rates, make mortgages easier to get, subsidize buyers, or stimulate the market, I think we should ask a question before automatically celebrating it:
Are we actually fixing the underlying problem?
Or are we just moving the pain somewhere else and kicking it farther down the road? 🤷🏼♂️
I don’t claim to have the answer.
I’m a real estate agent trying to understand this stuff just like everyone else and trying to understand it well enough that when one of my clients asks me, “What do you think rates are going to do next spring?” I can give them something better than:
“Well…the Fed might cut rates.”
So with ALL of that being said😂 Your home buying/selling journey needs to be tailored to YOU! Is your agent offering you data to set you up for success in the long run?
I’m a consultant not a salesman… I’ll never tell you an exact sales price for your property nor will I tell you an exact purchase price for the property you’re interested in nor will I make decision for you.. I WILL however provide you with the pros/cons of your decision(s) and TOGETHER make an informed decision you can be comfortable with 🫡
