The Expert Podcast

• Mortgage rates from the 1970s to the early 2000s were consistently around 8-10%.
• For approximately 30 years, mortgage rates were at or near 10%, until they dipped below 8% in the early 2000s.
• The early 1980s to the mid-1990s saw high inflation and unemployment, similar to current economic conditions, which may lead to a rise in rates to double digits.

• Mortgage rates are currently around 7%, with a recent 0.75% interest rate increase announced by the Federal Reserve, pushing rates higher.

• A simple formula to estimate mortgage payments at a 10% rate:
  • Take the loan amount and remove two zeros.
  • Example: A $390,000 loan results in a $3,400 monthly payment (plus taxes and insurance).
  • For a $500,000 loan, the payment would be around $5,000, and for a $650,000 loan, the payment would be around $6,500.

• In the 1980s, despite high mortgage rates (up to 15-16%), home prices did not drop significantly, and the market rebounded in the 1990s.
• A 10% mortgage rate may not have the same effect on supply and demand in real estate as it would in other commodities.
• The need for housing remains constant, as everyone requires a place to live, which influences the market differently than discretionary purchases.

• A landlord or property owner’s return on investment depends on interest rates, taxes, insurance, maintenance, and vacancy rates.
• Higher mortgage rates could affect both home prices and rental rates, but it may not always lead to lower home values, as people will still need to purchase homes regardless of the cost.