The Trust Layer for Market Analysts

The analyst discusses the impact of the Federal Reserve's interest rate policies on the real estate market. It explains that while many are calling for the Fed to lower interest rates to make housing more affordable, lowering interest rates does not inherently make housing more affordable, and in some cases, can make it less so. The analyst emphasizes that mortgage rates are more closely tied to the long end of the yield curve, particularly the 10 year yield, which is currently 4.216% and 30 year which is currently about 6.2%. It notes the common misconception that the Fed directly controls mortgage rates, and it predicts a rise in the long end of the yield curve could push mortgage rates higher as in past, lowering the S&P500 to 4500. Furthermore, a detailed examination of historical mortgage rates reveals a similar pattern. Mortgage rates initially decrease, but quickly rally upwards as the market prices in a higher inflation risk.