The David Greene Show – Episode Summary
Podcast Information:
- Title: The David Greene Show
- Host/Author: David Greene
- Description: Real Talk Real Estate with David Greene delves into the dynamic world of real estate business and investing, offering unfiltered stories, insider details, and expert insights. Whether building wealth, pivoting careers, or understanding the behind-the-scenes of the real estate industry, this podcast serves as an ultimate guide for listeners.
Episode Details:
- Episode Title: Mortgage Monday - Five Reasons Mortgages Will Increase | Episode 59
- Release Date: May 5, 2025
Introduction and Guest Appearance
[00:21 – 01:43]
David Greene welcomes listeners to "Real Talk Real Estate" and introduces the episode as part of "Mortgage Monday." He is joined by Christian Bachelder, affectionately referred to as "big brain," the "lone ranger," and "father to the mortgage mutt." The hosts engage in lighthearted banter before transitioning into a public service announcement.
Notable Quote:
- David Greene [00:47]: "We are looking to bring in new mortgage loan officers... Please do us a favor. Share the word about the show and the fact we're hiring with people that you know."
Christian emphasizes the high demand for mortgage loan officers and invites experienced professionals to join their team, highlighting the resources and growth opportunities available.
Main Discussion: Five Factors Leading to Increased Mortgage Rates
David and Christian delve into the core topic: the potential rise in mortgage rates. They identify and analyze five critical factors contributing to this trend.
1. China Selling US Treasuries
[02:27 – 07:03]
Christian explains the relationship between US Treasury bonds and mortgage rates. He elucidates how the sale of US Treasuries by major holders like China and Japan can lead to increased yields, subsequently driving up mortgage rates.
Notable Quotes:
- Christian Bachelder [05:03]: "Mortgage rates are, are fairly roughly correlated to the ten-year Treasury... if there are less buyers in the market for bonds, the market's going to have to adjust upwards."
- David Greene [07:03]: "They're investing in your debt, they're buying the note that you originated, and they want rates higher because they're getting a higher rate of return."
Christian highlights that Japan is actually the largest holder of US bonds, surpassing China, which underscores the broader geopolitical implications of bond sales on mortgage rates.
2. Tariff Conflicts: Trump vs. Powell
[07:03 – 11:39]
The discussion shifts to the tense relationship between former President Trump and Federal Reserve Chair Jerome Powell. Trump’s public criticisms of Powell and their differing economic strategies contribute to uncertainty in the financial markets.
Notable Quotes:
- Christian Bachelder [02:27]: "Trump has been kind of pounding the desk saying, you know, Powell's a doofus and I'm going to fire him... Trump just announced, 'I have no plans now or in the immediate future to fire Jerome Powell.'"
- David Greene [10:40]: "When you hurt the other side, you also hurt yourself... who's going to blink first and who's going to give something up."
The friction between Trump and Powell is portrayed as a potential destabilizing factor for mortgage rates, as conflicting policies can lead to increased market volatility.
3. Inflation from Rising Prices Due to Tariffs
[11:39 – 12:47]
Christian discusses how tariffs can lead to increased costs for goods, driving inflation. The Federal Reserve may respond to rampant inflation by raising interest rates to cool down the economy, directly impacting mortgage rates.
Notable Quotes:
- Christian Bachelder [11:39]: "If inflation runs away, that would lead to Powell needing to make a decision... to crank these and kind of hurt the economy in order to give it some medicine."
- David Greene [12:47]: "Increasing interest rates... slows down how much taxes are collected, you're decreasing how much wealth is created..."
The hosts debate the effectiveness of interest rate adjustments as a tool to combat inflation, with David expressing skepticism about their long-term efficacy.
4. Powell's Conflict with Trump
[14:00 – 15:26]
Further exploring the Trump-Powell dynamic, Christian illustrates how personal conflicts between political leaders and financial authorities can lead to unpredictable economic policies, thereby affecting mortgage rates.
Notable Quotes:
- Christian Bachelder [14:00]: "Imagine the scene of, like, gorilla versus King Kong just, you know, hammering on each other..."
- David Greene [15:26]: "If interest rates do go up on housing, that just slows down how many houses change hands..."
The relationship between political decisions and monetary policy is emphasized as a critical factor influencing the stability of mortgage rates.
5. Falling Stock Prices Due to Tariff and Company Profit Concerns
[15:26 – 24:13]
Christian analyzes the inverse relationship between stock and bond markets. Falling stock prices, driven by profit concerns from tariffs, can lead investors to seek the safety of bonds, affecting mortgage rates.
Notable Quotes:
- Christian Bachelder [15:56]: "Historically, there's a very strong correlation between when money exits the stock market, it will typically retreat into the security of bonds."
- David Greene [17:28]: "If you were listening on YouTube... the Dow was down 5 or 6% and mortgage rates dropped by like a half a percent. It was great."
Christian warns of the potential for large-scale bond sales by foreign holders, which could drastically increase mortgage rates. He underscores the strategic importance of monitoring stock market trends as indicators for mortgage rate movements.
Predictions and Future Outlook
[18:15 – 19:24]
The hosts share their projections on the future of mortgage rates. Both David and Christian believe that in the short term (next 7-8 months), rates are likely to rise. However, over a longer horizon (two to four years), rates may decrease, although Christian anticipates a potential upward trend in the near future.
Notable Quotes:
- Christian Bachelder [18:15]: "This is the hardest time in my career... I think my long-term projection, two to four years is still down... in the next seven, eight months, I think they're actually likely to go up."
- David Greene [19:05]: "In the short term, you think that they're probably going to go up and they're going to probably keep going up. And then long term we're going to figure out a way to get them back down."
This nuanced outlook provides listeners with a balanced perspective on navigating the volatile mortgage landscape.
Final Thoughts and Advice
[33:22 – 36:39]
In the concluding segment, David and Christian reflect on the broader economic implications of their discussion. They touch upon geopolitical tensions, the potential weakening of the US dollar, and the importance of financial preparedness. David also recommends educational resources to help listeners make informed decisions about their financial futures.
Notable Quotes:
- David Greene [32:10]: "...we have become a country that doesn't manufacture things, we don't produce as much... the dollar is not tied to something of value like actual work."
- Christian Bachelder [27:36]: "Imagine if cracks start to show... you enter stagflation, which is where there's runaway inflation, but there's also runaway unemployment."
They urge listeners to stay informed and proactive in managing their assets amid economic uncertainties.
Closing Remarks: David announces a new format for future episodes, offering condensed versions on YouTube while maintaining longer discussions on the podcast. He encourages audience engagement through comments and social media, emphasizing resilience and unity in facing economic challenges.
Final Quote:
- David Greene [36:39]: "Don't let fear take root. It will turn you into someone that you don't want to be. Understand that oftentimes things do get worse before they get better..."
Conclusion
In this episode of The David Greene Show, hosts David Greene and Christian Bachelder provide an in-depth analysis of the factors contributing to the potential rise in mortgage rates. Through a blend of economic theory, geopolitical insights, and personal perspectives, they equip listeners with the knowledge to navigate the complexities of the current real estate and financial markets. Their balanced discussion underscores the importance of staying informed and prepared in an ever-evolving economic landscape.