The David Greene Show

Episode 92: Mortgage Monday | Fed Exploring New Tools to Lower Mortgage Rates

Date: October 27, 2025
Host: David Greene
Guest: Christian Bashelder

Overview

In this lively and insightful episode of Mortgage Monday, David Greene and Christian Bashelder dig deep into the current state of the U.S. housing market, focusing on the Federal Reserve’s newest strategies to lower mortgage rates. They demystify economic jargon, explore the mechanics of quantitative tightening and easing, and debate what these policy shifts could mean for investors, homeowners, and the broader economy.

Key Discussion Points & Insights

1. The Current State of Mortgage Rates

• Subjectivity of “High” Rates (02:16)
  • Christian notes that while mortgage rates feel high compared to pandemic times, historically they aren't unprecedented.
    • Quote:
      “Everything's relative, right?...compared to COVID, there you go.” – Christian (02:16)
  • David and Christian agree that rate perspective is historical and relative.

2. How the Fed Indirectly Affects Mortgage Rates

• Fed Funds Rate Explained (02:46)
  • The Fed controls the federal funds rate, influencing treasury yields, which then impact mortgage rates.
    • Quote:
      "The Fed controls the federal funds rate...the treasury note yields impacts the mortgage rates, which is where we get to where we are today." – David (02:46)

3. Do Lower Mortgage Rates Always Mean Higher Home Prices?

• Supply & Demand Dynamics (04:20 - 07:26)
  • Christian argues that simply lowering rates doesn't automatically drive prices higher; inventory constraints play a larger role.
  • David stresses that available capital and transaction volume mattered more than low interest rates post-2020.
    • Quote:
      "It was not just because interest rates were low...when everyone caught on, oh, man, there’s a lot of inflation. This is bad. Now real estate’s your only safe haven..." – David (07:26)

4. The Fed’s Dilemma: Balancing Inflation and Employment

• The Dual Mandate (09:14)
  • The Fed must promote both low unemployment and low inflation, leading to a teeter-totter effect where fixing one can affect the other.
• Policy Tools (12:09)
  • Christian compares the Fed meeting rate cut predictions to sports odds using the FedWatch tool.

5. Fed’s Alternative Tools: Quantitative Tightening & Easing

• What Do These Terms Mean? (13:48 - 18:16)
  • In plain English, Christian compares quantitative easing to a car dealership buying up all the Civics to artificially raise prices by lowering supply.
  • Quantitative tightening is the reverse: selling off those assets and flooding the market, which can depress prices.
    • Quote:
      "Calling it like quantitative easing and quantitative timing makes it sound like...rocket science. It's not, guys." – Christian (16:32)
• Role of Government Bonds (18:16 - 21:45)
  • Discussion on how Treasuries function as a government IOU, with faith in the U.S. economy/military as the underpinning "collateral."
    • Quote:
      "If you really get down to the core of it, the collateral is the U.S. military..." – Christian (21:45)

6. Potential Policy Change: Pausing Quantitative Tightening

• Powell’s Latest Remarks (15:23, 16:32)
  • The Fed is considering pausing its sale of Treasuries, which could lower yields and thus mortgage rates.
  • Christian translates the impact: if the Fed reinvests around $18B in maturing bonds (instead of letting them expire), this could compress mortgage spreads by 20–30 basis points.
    • Quote:
      "What this article is discussing is the Fed is now toying with the idea...for every bond that expires, we buy a new one." – Christian (23:33)
• Quantitative “Holding” (26:09)
  • Christian coins the idea of the Fed neither buying nor selling more – just maintaining holdings – as “quantitative holding.”

7. Likely Impact on Housing & the Economy

• Rate Projections & Healthy Ranges (27:13)
  • Christian and David agree a “healthy” mortgage market means 30-year rates around 4–6% and unemployment between 2–5%.
    • Quote:
      "If everything is working well...unemployment rates are between 2 and 5% and 30-year mortgage rates are between 4 and 6%." – Christian (27:13)
• Fiscal Responsibility and Election-Year Temptations (30:16)
  • David warns against “political flooding” of the market with cheap money during election years, using a vivid analogy:
    • Quote:
      "Nobody really knows why they feel so good. It's because we were putting cocaine in their Coca Cola..." – David (30:16)
• Call for Targeted, Responsible Policy (30:30)
  • The need to use policy like a surgeon – targeting mortgage rates without overheating the rest of the economy.

8. Empowering Listeners: Real Estate as the Safer Bet

• David illustrates why housing is a durable asset, likening production limits to the “hard to get gold” appeal of Bitcoin or gold, making real estate valuable as a hedge against inflation.

Notable Quotes & Memorable Moments

• Perspective on Rates:
  "It's subjective, right?...The Austin's, the markets like that. But in total across the country, houses are worth more now than they were during COVID even though rates have more than doubled."
  – Christian (04:20)

• Central Banking Explained:
  “...it’s not really printing money, but use the phrase ‘printing money’ – this is what we’re actually doing.”
  – David (18:19)

• Backing the Dollar:
  "If you really get down to the core of it, it's the collateral is the U.S. military."
  – Christian (21:45)

• Fed Policy as a Blunt Tool:
  "We want to affect housing. We don’t want to affect everything in the economy. We need to quit, like, looking at things that affect everything and look at them that only affect one thing."
  – David (30:30)

• Election-Year Analogy:
  "It's because we were putting cocaine in their Coca Cola. They just know they're in a good mood and they want more of it..."
  – David (30:16)

Important Timestamps

• 00:24 – Episode intro; outline of main topics
• 02:16 – Discussion on whether rates are “high” and context
• 04:20–07:26 – Explaining the impact of rates versus inventory
• 09:14–12:09 – Dual Fed mandate and FedWatch tool
• 13:48–18:19 – Nuts and bolts: bonds, quantitative easing/tightening
• 23:19–26:09 – What would happen if the Fed just “holds” bonds
• 27:13–30:30 – Projecting a “healthy” rate environment and critical policy analogies
• 30:30 – Why policy targeting matters

Final Thoughts

David and Christian provide a rare blend of clarity, real-world analogies, and expert candor. They encourage investors to deepen their understanding of macroeconomic forces, reminding listeners that real estate’s resilience lies in its relative scarcity and complexity compared to other investments. Their hope: the Fed uses its expanded toolkit wisely—balancing growth & stability—without triggering the economic highs and lows of the past.

Useful Links and Contacts:

• The One Brokerage
• David Greene: Website, Instagram @davidgreene24
• Christian Bashelder: Instagram @the1broker

For all things Mortgage Monday and more real estate wisdom, subscribe on Apple, Spotify, or YouTube, and join the conversation!