It's official:

Mortgage rates have just dropped to their lowest level in nearly 3 years amid President Trump's latest actions.

The average interest rate on a 30-year mortgage in the US is down to 5.99%, the lowest since February 2023.

This comes just days after President Trump… pic.twitter.com/xBnH69Q0Tn

— The Kobeissi Letter (@KobeissiLetter) January 9, 2026

No, it simply drives up the price of the MBSs. That means the people buying them have less money to spend on other stuff. It's a wash.

Inflation only occurs at the aggregate level.

Got it, I'll let centuries of economic data know.

Sims said:

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Got it, I'll let centuries of economic data know.

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The total money supply is not going up. It's existing money. I'm sorry you don't get it. The Fed is not involved here. The demand for other stuff would go down by an equivalent amount. In fact, they might sell other liquid assets to do this, e.g. stock.

Logos Stick said:

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Sims said:

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Got it, I'll let centuries of economic data know.

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The total money supply is not going up. It's existing money. I'm sorry you don't get it. The Fed is not involved here. The demand for other stuff would go down by an equivalent amount. In fact, they might sell other liquid assets to do this, e.g. stock.

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Velocity matters. Read up.

I don't need to read up. This will not cause inflation. It will cause MBS prices to go up, yields to go down, thus allowing mortgage rates to drop.

By your understanding, if Bill Gates purchased $200 billion of MBSs, inflation would occur. Nonsense.

Logos Stick said:

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Sims said:

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Got it, I'll let centuries of economic data know.

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The total money supply is not going up. It's existing money. I'm sorry you don't get it. The Fed is not involved here. The demand for other stuff would go down by an equivalent amount. In fact, they might sell other liquid assets to do this, e.g. stock.

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That's not what he's saying. He's saying the velocity of money and supply of money are two separate things, both which can impact inflation. This is impacting the velocity of money.

Think of it this way, if we print $500T and lock it in a vault that nobody uses, what does it do to inflation? Absolutely nothing. You can increase the supply of money without impacting inflation. If we increase the speed that the same dollar changes hands, and you're going to eventually have that same dollar back in your hand very soon, you'll spend it more and prices may increase.

Then rates drop, financing gets easier, home buying speeds up, people willing to drop prices to get their house sold go down, prices hold or increase due to the higher demand.

Your refusal to consider 2nd and 3rd derivative effects does not negate the fact that they happen.

Sims said:

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Then rates drop, financing gets easier, home buying speeds up, people willing to drop prices to get their house sold go down, prices hold or increase due to the higher demand.

Your refusal to consider 2nd and 3rd derivative effects does not negate the fact that they happen.

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The price of an individual item - or items - going up is not inflation. Perhaps you need to read up and understand what inflation is.

Re-read the thread. It's a thread about home prices increasing because the government is planning on juicing the MBS market.

It's not a thread about monetary inflation. It's a thread about price increases (many people call that inflation).

The point is, cheaper financing raises home prices.

Everything I've typed is consistent with that. Hope you feel the same about your posts.

Sims said:

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Re-read the thread. It's a thread about home prices increasing because the government is planning on juicing the MBS market.

It's not a thread about monetary inflation. It's a thread about price increases (many people call that inflation).

The point is, cheaper financing raises home prices.

Everything I've typed is consistent with that. Hope you feel the same about your posts.

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The poster I responded to said this:

Quote:

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And increase inflation rate. Printing money during COVID was the primary cause of Biden inflation.

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"Inflation rate" does not in any way apply to the price of MBS bonds going up. This action by Trump will not cause the rate of inflation to rise.

Everything I typed is 100% accurate and in context.

That is not doable for everyone, everywhere. At today's rates, a mortgage payment 1/8 of the median US household income only equates to a $100k house. Those don't really exist anywhere. If you look at median household income and median home price in the greater Austin area, a mortgage for a median house is about 40% of the median income. If you want something that's 20%, much less 1/8, of the median income, those places are few and far between and many require plenty more investment beyond simple sweat equity.

ABATTBQ11 said:

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That is not doable for everyone, everywhere. At today's rates, a mortgage payment 1/8 of the median US household income only equates to a $100k house. Those don't really exist anywhere. If you look at median household income and median home price in the greater Austin area, a mortgage for a median house is about 40% of the median income. If you want something that's 20%, much less 1/8, of the median income, those places are few and far between and many require plenty more investment beyond simple sweat equity.

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I know thats not doable for everyone, and we don't make the median, but you can go much lower than 40% in most cases. My example is for someone who is renting currently, not someone coming off the sidelines because they are living with relatives or something similar. If you can rent then you should be able to find a house that rent supports, if you cannot then you are better off financially renting.


There are homes in Austin at $250k that would support about 20% of the take home pay of $125k. Here is an example, and that is inside the Austin City limits.

Take a look at this home I found on Realtor.com
5237 Coppermead Ln, Austin
$229,900 3beds 2.5baths

https://apps.realtor.com/mUAZ/a62xmu08

It takes work to find and won't be perfect but they can be found. There is even more in the Austin greater area.

Logos Stick said:

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Sims said:

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Got it, I'll let centuries of economic data know.

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The total money supply is not going up. It's existing money..

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Where is the Federal government getting this money again? Where is this surplus they are taking it from? If the government is already running a deficit, then that money will have to be created at the end of the day, and it will increase the money supply. Also you can have inflation in certain markets. If the government tomorrow took money from healthcare to give a subsidy for car loans, you would see an inflation of car prices. While overall money supply would not go up in that scenario, car prices would increase. Same will happen here.

You can't cheat economics.

aggrad02 said:

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ABATTBQ11 said:

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HTownAg98 said:

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That's going to take action on the state and local level.

If you want more affordable housing, you don't do it by building "affordable housing" with tax credits and all that mess. You do it by building more upper end housing.

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No. All that does is build a housing supply that becomes unaffordable over time. The biggest drivers in housing costs over the last 40-50 years have been the ever increasing available of cheaper and cheaper credit accompanied by an increasing size of the average home. Average home size has gone from 1500 sf on average to 2500 sf in that time range, with no decrease in $/sf cost to build, adjusted for inflation. Even with no other factors like interest rates, homes would cost 65% more than they did in 1975 after adjusting for inflation. Individual income adjusted for inflation over that time frame has only risen around 40%. Based purely on size, the average house in the housing supply is about 18% more expensive relative to income. There is a lack of affordably sized homes that will not be fixed by building bigger or nicer ones.

If anything, that compounds the issue because homeowners leaving their older homes for the newer, nicer, bigger homes will have to borrow more money to make the transition and ask for higher prices for their existing homes. The answer to unaffordable cars wouldn't be to build more Lexuses, it would be to build more base Kias with fewer options.

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The first paragraph was great,, but homeowners always ask for the highest price they can get. Moving to a more or less expensive home will not change that, they will always seek to maximize.

Cars aren't an apples to apples comparison because they physically and functional depreciate more than a house.

But the interesting thing is this is what is happening in the car market, less "base" models are being made and mostly those with more options are being made, and new car prices are higher than in the past relative to income.The solution is to not to overpay for a new car but buy a used one. Same would be the solution in the housing market.

For example you can get a 2020 Lexus for cheaper than a new Kia.

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Yes homeowners seek the highest sales price they can get, but what I'm talking about is asking for higher prices than they already are since they are not looking to upgrade en masse even at current prices. If you build a bunch of $600k houses hoping the people in the $400k houses halfway through their $200k-$250k mortgages will upgrade and free up those $400k homes, good luck because you're asking them to make up that $300k(ish) difference between their equity and the new home price with a mortgage. Not only is that larger than their current mortgage, but it's probably at a higher interest rate as well. It's not a realistic, widespread solution unless those $400k homes turn into $500k homes or the intent is to have everyone in a home borrow even more to upgrade, which compounds the problem.

I know cars aren't apples to apples, but they're easily relatable. The point is that you aren't going to get people out of their current Kia and into a new Lexus to free up a bunch of used Kias. Lexus owners, maybe, but those used Lexuses probably aren't going to be bought up by those current Kia owners because they can't afford them. It's not the purchase price, but the maintenance and repair costs on a used luxury vehicle. And honestly, Lexus may be a bad example because they're still Toyotas under the hood and generally very reliable and easy to maintain (though still not cheap), but something like a Mercedes will eat you alive. For instance, doing on oil change on your own will run you $80 in oil and a filter.

Sq 17 said:

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The theory is iirc that govt takes these loans off the books of the lending institutions and the lending institutions go out and approve more mortgages loans

One of the unintended consequences if the banks know they can make the loan and flip it to the govt then eventually the banks will disregard all lending standards as they re-loan that same money over and over

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Should use the money to make it more profitable for builders to build starter homes. Part of the problem with the Real Estate market in some areas is builders won't even bother with building starter homes because there is not enough profit in it to make it worth it.

aggrad02 said:

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ABATTBQ11 said:

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That is not doable for everyone, everywhere. At today's rates, a mortgage payment 1/8 of the median US household income only equates to a $100k house. Those don't really exist anywhere. If you look at median household income and median home price in the greater Austin area, a mortgage for a median house is about 40% of the median income. If you want something that's 20%, much less 1/8, of the median income, those places are few and far between and many require plenty more investment beyond simple sweat equity.

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I know thats not doable for everyone, and we don't make the median, but you can go much lower than 40% in most cases. My example is for someone who is renting currently, not someone coming off the sidelines because they are living with relatives or something similar. If you can rent then you should be able to find a house that rent supports, if you cannot then you are better off financially renting.


There are homes in Austin at $250k that would support about 20% of the take home pay of $125k. Here is an example, and that is inside the Austin City limits.

Take a look at this home I found on Realtor.com
5237 Coppermead Ln, Austin
$229,900 3beds 2.5baths

https://apps.realtor.com/mUAZ/a62xmu08

It takes work to find and won't be perfect but they can be found. There is even more in the Austin greater area.

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$125k/yr is $30k more than the median household take home in Austin. At that income level you're already talking about only the top 20% of households.

And I didn't say those homes were non-existent, just that there are not enough to support the idea of, "Just buy below your means," as a widespread solution for unaffordability. Half of households in the Austin area make $90k/yr or less, making the price for that 20% threshold $250k. There's maybe 200k-250k households in Austin. If 5% are in the market at any one time, that's 10k-12k potential buyers. If we assume only 1/4 have the median income or less, that's 2500-3000 buyers. Now go look at Zillow and search for homes being listed under $250k. There's less than 500 from Kyle to Georgetown. Even if you're renting and are looking to replace your rent with a mortgage payment, the supply of homes in that price range is very small. Factor in things like schools, crime rates, or proximity to jobs for buyers and it gets even smaller.

ABATTBQ11 said:

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aggrad02 said:

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ABATTBQ11 said:

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That is not doable for everyone, everywhere. At today's rates, a mortgage payment 1/8 of the median US household income only equates to a $100k house. Those don't really exist anywhere. If you look at median household income and median home price in the greater Austin area, a mortgage for a median house is about 40% of the median income. If you want something that's 20%, much less 1/8, of the median income, those places are few and far between and many require plenty more investment beyond simple sweat equity.

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I know thats not doable for everyone, and we don't make the median, but you can go much lower than 40% in most cases. My example is for someone who is renting currently, not someone coming off the sidelines because they are living with relatives or something similar. If you can rent then you should be able to find a house that rent supports, if you cannot then you are better off financially renting.


There are homes in Austin at $250k that would support about 20% of the take home pay of $125k. Here is an example, and that is inside the Austin City limits.

Take a look at this home I found on Realtor.com
5237 Coppermead Ln, Austin
$229,900 3beds 2.5baths

https://apps.realtor.com/mUAZ/a62xmu08

It takes work to find and won't be perfect but they can be found. There is even more in the Austin greater area.

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$125k/yr is $30k more than the median household take home in Austin. At that income level you're already talking about only the top 20% of households.

And I didn't say those homes were non-existent, just that there are not enough to support the idea of, "Just buy below your means," as a widespread solution for unaffordability. Half of households in the Austin area make $90k/yr or less, making the price for that 20% threshold $250k. There's maybe 200k-250k households in Austin. If 5% are in the market at any one time, that's 10k-12k potential buyers. If we assume only 1/4 have the median income or less, that's 2500-3000 buyers. Now go look at Zillow and search for homes being listed under $250k. There's less than 500 from Kyle to Georgetown. Even if you're renting and are looking to replace your rent with a mortgage payment, the supply of homes in that price range is very small. Factor in things like schools, crime rates, or proximity to jobs for buyers and it gets even smaller.

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First, the $125k was before taxes, after taxes on average that is $96k, 20% mortgage on a $250k home.

The median family household income in the Austin MSA is $123K, and of course half are going to make less that, its the median.

Very small does not equal zero.

All of those factors you listed at the end are choices.

The point is that it is possible, one just has to make the choice. A person doesn't have to live in Austin, especially if they are making less than the median…..etc etc…. Its about choices and you shouldn't expect the government to help you buy outside of your means. It won't work out well.

And if some wants to pay 40% or 80% of their income on housing that is fine, just don't complain and look to the government due to those choices.

Malibu said:

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I haven't done my homework as much as I should on this issue, but I do have a hypothesis. Home values are going naturally crash in the next 10 years from one cause: Baby boomers control vast swarths of the housing inventory, and they will die off. There will structurally be more supply than demand. It is a massive headache for the younger generation today, but home ownership will in one short decade be affordable to the masses.

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It will take more than 40 years to kill off us boomers at current death rates. Peak year is 20 years out. Over the next decade not much will happen because of your hypothesis, compared to increased demand over the same periods due to increased number of households (declining and later marriages), increased housing costs (inflation compared to overall inflation), stupid over-regulation, etc.

ABATTBQ11 said:

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HTownAg98 said:

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That's going to take action on the state and local level.

If you want more affordable housing, you don't do it by building "affordable housing" with tax credits and all that mess. You do it by building more upper end housing.

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No. All that does is build a housing supply that becomes unaffordable over time. The biggest drivers in housing costs over the last 40-50 years have been the ever increasing available of cheaper and cheaper credit accompanied by an increasing size of the average home. Average home size has gone from 1500 sf on average to 2500 sf in that time range, with no decrease in $/sf cost to build, adjusted for inflation. Even with no other factors like interest rates, homes would cost 65% more than they did in 1975 after adjusting for inflation. Individual income adjusted for inflation over that time frame has only risen around 40%. Based purely on size, the average house in the housing supply is about 18% more expensive relative to income. There is a lack of affordably sized homes that will not be fixed by building bigger or nicer ones.

If anything, that compounds the issue because homeowners leaving their older homes for the newer, nicer, bigger homes will have to borrow more money to make the transition and ask for higher prices for their existing homes. The answer to unaffordable cars wouldn't be to build more Lexuses, it would be to build more base Kias with fewer options.

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Economists that have actually studied this say you're wrong. When you build high-end housing where there is some demand for it, those buyers don't appear out of thin air. When those buyers upsize, it creates increased supply at their level, lowering prices. This cascades downhill until you hit the bottom. It's been proven in single family and especially apartments.

HTownAg98 said:

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ABATTBQ11 said:

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HTownAg98 said:

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That's going to take action on the state and local level.

If you want more affordable housing, you don't do it by building "affordable housing" with tax credits and all that mess. You do it by building more upper end housing.

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No. All that does is build a housing supply that becomes unaffordable over time. The biggest drivers in housing costs over the last 40-50 years have been the ever increasing available of cheaper and cheaper credit accompanied by an increasing size of the average home. Average home size has gone from 1500 sf on average to 2500 sf in that time range, with no decrease in $/sf cost to build, adjusted for inflation. Even with no other factors like interest rates, homes would cost 65% more than they did in 1975 after adjusting for inflation. Individual income adjusted for inflation over that time frame has only risen around 40%. Based purely on size, the average house in the housing supply is about 18% more expensive relative to income. There is a lack of affordably sized homes that will not be fixed by building bigger or nicer ones.

If anything, that compounds the issue because homeowners leaving their older homes for the newer, nicer, bigger homes will have to borrow more money to make the transition and ask for higher prices for their existing homes. The answer to unaffordable cars wouldn't be to build more Lexuses, it would be to build more base Kias with fewer options.

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Economists that have actually studied this say you're wrong. When you build high-end housing where there is some demand for it, those buyers don't appear out of thin air. When those buyers upsize, it creates increased supply at their level, lowering prices. This cascades downhill until you hit the bottom. It's been proven in single family and especially apartments.

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I don't know that I believe this, OR more accurately it probably depends heavily on the market we are talking about. This won't be true in an already higher-end home mature market. Let's use Dallas as an example.

Dallas is a market where there is heavy inbound immigration from other states (several Texas cities qualify here), so you are getting a lot of high end homes built from people out of state who are not freeing up any local supply at all.

From a maturity standpoint, affordable single home housing inside of Dallas proper is already practically non-existent in good neighborhoods so there is that tradeoff as well. The general trend is that people move out of a more expensive city core to the suburbs and exurbs rather than the other way around. You aren't getting a lot of people who are upgrading their $250k affordable home out in a suburb to a $2M home in Preston Hollow.

Thus, it's not like you can look at a Dallas and see a 1:1 offset from a lower end home to a higher end home without factoring other things like out of state immigration and MSA integration which matter.

Dallas class C apartment rents are down 6.5%. It's because they built high end apartments. It works in single-family housing too.

HTownAg98 said:

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Dallas class C apartment rents are down 6.5%. It's because they built high end apartments. It works in single-family housing too.

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Apples and oranges with single-family to apartments. Dallas has an excess supply of the latter partly because they do not have enough supply of the former (that is considered affordable).

So, upgrading your apartment from a lower rent to higher rent place makes total sense here for folks moving around in the apartment ecosystem.

Maybe a more in tune RE expert can weigh in here, but on the surface I don't believe the general economist conclusion you are stating at least for the Dallas market. I know that it absolutely makes sense in many others. I just think you have to look at that conclusion by market.

YouBet said:

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HTownAg98 said:

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ABATTBQ11 said:

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HTownAg98 said:

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That's going to take action on the state and local level.

If you want more affordable housing, you don't do it by building "affordable housing" with tax credits and all that mess. You do it by building more upper end housing.

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No. All that does is build a housing supply that becomes unaffordable over time. The biggest drivers in housing costs over the last 40-50 years have been the ever increasing available of cheaper and cheaper credit accompanied by an increasing size of the average home. Average home size has gone from 1500 sf on average to 2500 sf in that time range, with no decrease in $/sf cost to build, adjusted for inflation. Even with no other factors like interest rates, homes would cost 65% more than they did in 1975 after adjusting for inflation. Individual income adjusted for inflation over that time frame has only risen around 40%. Based purely on size, the average house in the housing supply is about 18% more expensive relative to income. There is a lack of affordably sized homes that will not be fixed by building bigger or nicer ones.

If anything, that compounds the issue because homeowners leaving their older homes for the newer, nicer, bigger homes will have to borrow more money to make the transition and ask for higher prices for their existing homes. The answer to unaffordable cars wouldn't be to build more Lexuses, it would be to build more base Kias with fewer options.

---

Economists that have actually studied this say you're wrong. When you build high-end housing where there is some demand for it, those buyers don't appear out of thin air. When those buyers upsize, it creates increased supply at their level, lowering prices. This cascades downhill until you hit the bottom. It's been proven in single family and especially apartments.

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I don't know that I believe this, OR more accurately it probably depends heavily on the market we are talking about. This won't be true in an already higher-end home mature market. Let's use Dallas as an example.

Dallas is a market where there is heavy inbound immigration from other states (several Texas cities qualify here), so you are getting a lot of high end homes built from people out of state who are not freeing up any local supply at all.

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I definitely applies to Dallas, you should see what the cost of your mid tier homes would be if high tier homes were not being built. Those people are coming one way or another, if the high tier homes were not built the reverse would happen, mid tier homes get really expensive. Also its not like developers are building a lot of high tier homes that are sitting empty. If they are occupied, then there was demand, if that demand was by some of the most wealthy and its not being fulfilled then prices will start to skyrocket as they moneywhip the mid tier properties.

Interest rates so far have been largely unaffected.

Have any mortgage bonds been purchased yet?

Rapier108 said:

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Bad & Dumb Trump

But somehow a bunch of "conservatives" will come out and defend failed, leftwing policies because this time it is Trump doing it.

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There is a definite shift in the "feel" of this board toward Trump for what it's worth. He has gone from doing everything right, to doing a few dumb things, to doing a lot of dumb things. Real conservatives are not supporting Trump as you think. It's just the fringe sunshine pumpers now.

Over_ed said:

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Malibu said:

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I haven't done my homework as much as I should on this issue, but I do have a hypothesis. Home values are going naturally crash in the next 10 years from one cause: Baby boomers control vast swarths of the housing inventory, and they will die off. There will structurally be more supply than demand. It is a massive headache for the younger generation today, but home ownership will in one short decade be affordable to the masses.

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It will take more than 40 years to kill off us boomers at current death rates. Peak year is 20 years out. Over the next decade not much will happen because of your hypothesis, compared to increased demand over the same periods due to increased number of households (declining and later marriages), increased housing costs (inflation compared to overall inflation), stupid over-regulation, etc.

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First off - are you saying that you believe the average boomer is living to the age of 85-90? That seems high for an average. Regardless, there will be a bunch in the interim that either move in with family because they need a caretaker or move to assisted living.

Second - I think the later marriage argument is suspect. Sure, marriages may be later, but lots of those studies point out that cohabitation is up while marriage is down (and F16 hates that part of it too). That should be a net nothing. I will concede that delaying marriage and cohabitating may produce more dual income households, which could increase demand at some levels and thus keep prices up.