BiggerPockets Daily The Converging Factors Creating a Perfect Storm For Mortgage Rates
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May 31, 2025 Rising mortgage rates are creating a tough landscape for real estate investors. Recent treasury auction failures have fueled concerns over elevated borrowing costs. The podcast highlights key economic factors like potential Fannie Mae privatization and shifting foreign investment trends affecting the market. Instead of waiting for perfect conditions, listeners learn actionable strategies to adapt, such as focusing on cash flow and exploring alternative financing options. It's a vital discussion for anyone looking to thrive in today's challenging environment.
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Treasury Auction Failure Raises Rates
- A failed $16 billion 20-year treasury auction caused yields to spike as investors demanded higher returns.
- This signals trouble selling government debt, directly pushing mortgage rates higher for the foreseeable future.
Fiscal Deficits Drive Up Yields
- Massive deficit spending and a $5 trillion debt addition will force investors to demand higher yields.
- Higher treasury yields translate into higher borrowing costs, including mortgage rates tied to the 10-year Treasury.
Fannie and Freddie Privatization Risk
- Privatizing Fannie Mae and Freddie Mac raises MBS yields by 30-97 basis points, pushing mortgage rates even higher.
- This could add about 1% to 30-year mortgage rates, potentially grinding the housing market to a halt.