Wealth Formula Podcast

561: Where Are Mortgage Rates Headed?


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A couple of weeks ago, I had Barry Habib on the podcast talking about where he believes interest rates and the economy may be headed over the next several years. Barry has been one of the more accurate voices in housing and mortgage finance during a period when many economists and market commentators have repeatedly gotten it wrong. This week, I wanted to continue that discussion with mortgage industry veteran Rob Chrisman because I think there's a bigger lesson here for investors. Right now, the stock market is near all-time highs again, and naturally, people want in. Investors are drawn toward momentum. They feel safer buying things that have already gone up. At the exact same time, many areas of real estate—particularly multifamily—have already experienced massive repricing, with some assets trading 30–40% below peak valuations from just a few years ago. And yet most investors are far more comfortable chasing expensive assets than buying discounted ones. That's the irony of investing. As Warren Buffett famously said, "Be fearful when others are greedy and greedy when others are fearful." Easy to say. Very hard to do. Part of the reason this environment feels so confusing is because we are dealing with conflicting macroeconomic forces at the same time. On one side, you have persistent inflation concerns, massive government deficits, Treasury issuance, geopolitical tensions, and uncertainty around Fed policy. All of those things can keep long-term interest rates elevated. On the other side, there are growing signs of slowing geopolitical tensions easing over time. I suspect that once the Iran conflict is resolved, we may start to see rates come down as energy prices help quell inflationary pressures, alongside broader economic activity, weakening consumer confidence, and eventually perhaps even disinflationary pressure from technology and AI-driven productivity gains. That's why both Barry Habib and Rob Chrisman make an important point that many investors still misunderstand: mortgage rates are not simply controlled by the Federal Reserve. Markets are constantly trying to price all of these competing forces in real time. Rob does a great job explaining how mortgage-backed securities, Treasury markets, inflation expectations, labor data, and global capital flows all interact to determine where rates go next. He also explains why the ultra-low rates of 2020 and 2021 were likely an anomaly created by extraordinary Federal Reserve intervention—not necessarily something we should anchor to as "normal." The bigger question for investors is this: Are today's elevated rates temporary noise within a longer-term descending rate cycle? Or are we entering a structurally different environment altogether? Because if rates ultimately move lower over the next several years, the assets currently under the most pressure today may eventually become the assets people wish they had bought when they were on sale.
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Wealth Formula PodcastBy Buck Joffrey

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