"Your House Is Your Castle Against Rising Inflation"
 |
This is a column I published yesterday (4-18-22) in the Wall Street Journal. Unfortunately, it’s behind their paywall. I won't be able to post it here for a month given their copyright arrangement. The gist of the article is that, once you adjust for inflation, short-term mortgage rates are essentially zero and could end up negative if inflation doesn’t decline as the bond market predicts. As for projected long-term real mortgage rates, they too are close to rock bottom. Consequently, home purchase remains very inexpensive despite appearances to the contrary based on nominal mortgage rates. If you have access to the Journal, take a read. If not, consider a subscription. Yes, its regular columnists are quite political. But it may have the best news reporting of any U.S. paper.
The WSJ opinion section (last 4 pages of section 1) are Odious. It's not doing journalism that's that great. But there is too much rate fakery going on now. The "Fed Funds Rate" set at __whatever__ doesn't mean anything in a regime of excess liquidity and "ample reserves". Which bank wants to BORROW Fed Funds? All the SIFI have excess reserves. It's all meaningless. All intervened. All fake numbers. Our 10 year is at 2.8% which is equivalent to ~4.5% if you roll off the 2-3 Trillion recently dumped on due to Covid crisis. Finance and Economics have been a fake wonderland for the last decade plus.