I hope you’re having a great week! This week, let’s tackle two major topics in the news that directly affect your financial well-being.
Navigating Rates: The “Good News is Bad News” Dynamic
First, let’s talk about interest rates. After a period of calm, we’ve seen rates tick higher again, with the 30-year fixed averaging .05 percent higher as of November 6th.
This brings up a strange market paradox: “Good news is bad news” for rates.
What does that mean? When we see strong economic reports—like the higher-than-expected private job gains and the continuing expansion of the services sector—it signals a resilient economy. While positive overall, a strong economy makes the Federal Reserve nervous about inflation staying high. The market anticipates the Fed keeping rates “higher for longer,” which causes the bond yields that mortgage rates track closely to rise.
The Federal Reserve itself is currently divided on its next move, adding to the volatility. But here’s the key takeaway: volatility doesn’t mean opportunity disappears. It just means you need a dedicated professional to help you navigate these movements and build a clear, strategic plan.
The Affordability Debate: The 50-Year Mortgage?
Affordability remains the top concern. Home prices are still growing nationwide, up 1.7 percent year-over-year. To address this, there’s a new, controversial proposal being discussed: the 50-year mortgage term.
The core argument for this idea is compelling: stretching the term makes the monthly payment significantly lower, helping more buyers qualify. For instance, on a $300,000 loan at a 6.25 percent mortgage rate, the payment could drop by over $300 per month.
However, the numbers tell a different story in the long run. That lower payment comes at a steep price: you’d pay approximately $250,000 more in total interest compared to a traditional 30-year term. Lowering the monthly bill is tempting, but if it massively slows your ability to build home equity and creates debt that lasts two generations, it’s not a smart financial strategy.
As your broker, I love any idea that helps a family get their first key. But my job is to help you build wealth, not just buy time. Before considering any extended-term loan, let’s have a genuine, deep-dive conversation about your financial future.
My Door is Always Open
Please know I am here to help you cut through the market noise. We have upcoming inflation reports this week – Consumer Price Index (CPI) and Wholesale Prices (PPI) – that will certainly move the needle, and I’ll be watching closely for you.
Do you have any questions about the current market, or just want to check in? Simply send me an email or call/text me at 818.307.6072 and let’s connect!
