To conclude our discussion on mortgage rates, house prices & epiphenomena, let’s consider the Fed’s role, or lack of one, in the housing market.
The 1st Gulf War and its effect on oil prices is a good parallel to mistaking mortgage rates for house prices. While connected, they aren’t the same thing!
Real estate is its own market, subject to its own forces of supply and demand. Thinking that interest rates are the only factor driving prices is too reductive!
High mortgage rates don’t necessarily lead to lower house prices because high rates themselves are indicative of a bull market in housing! Here’s why.
A quick check of the correlation between home prices and 30y mortgage rates shows that it constantly changes. Simply put, homes aren’t 30y bonds. Here’s why.
30y mortgage rates in the US have risen sharply to ~4%, giving rise to concern that home values will fall. Are these claims and concerns valid?
Russia’s SWIFT ban has been said to have done the most economic damage. Unfortunately, it really isn’t as effective as the media makes it out to be. Here’s why.
As long as the world relies on a reserve currency that is distributed by banks, global USD crises will occur. FIMA is but a band aid over a systemic problem.
Everyone’s need for Dollars, and their inability to print them, led ex-US Treasury Secretary John Connally to call the USD “our currency, but your problem”.
In a crisis, foreign central banks sell their foreign reserves to provide their banking systems with USDs – but having more reserves isn’t always better.