{"id":72084,"date":"2022-04-02T02:15:27","date_gmt":"2022-04-02T09:15:27","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=72084"},"modified":"2022-04-04T17:06:02","modified_gmt":"2022-04-05T00:06:02","slug":"black-coffee-2-apr-2022","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id72084-black-coffee-2-apr-2022.html","title":{"rendered":"Black Coffee: War of the Worlds"},"content":{"rendered":"

\"\"It’s time to sit back, relax and enjoy a little joe …<\/em><\/p>\n

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.<\/p>\n

I’ve got another busy weekend ahead of me, so let’s get right to this week’s commentary …<\/p>\n

In this new pandemonium, the best of us will remember what has been best about us: liberty, the rule of law, freedom of speech and the press, the dignity of work, our sense of obligation to a common good, and the decorum of truth-telling. For now, strive to stay sane against all the inducements of the wicked.<\/em><\/p><\/blockquote>\n

— James Kunstler<\/strong><\/p>\n

Credits and Debits<\/strong><\/p>\n

Debit:<\/strong><\/span> Did you see this? The average rate on the 30-year fixed mortgage has been rising significantly higher lately. In fact, it closed the week on March 26th at 4.95%. More importantly, with both rates and prices now considerably higher, the median mortgage payment is now more than 20% higher<\/a> than it was a year ago. With that in mind, here’s a fun math fact: When a 30-year mortgage rate exceeds 5.31%, the amount of interest paid over the life of the loan exceeds the amount of principal that is borrowed. Will that<\/strong><\/em> be the trigger that reverses homebuyer sentiment?<\/p>\n

\"\"<\/a><\/p>\n

Credit:<\/strong><\/span> Needless to say, interest rates have a real effect on the housing market. As macro analyst Bill Holter points out, rising rates are reducing the pool of qualifying homebuyers who are depending on a mortgage to get into a new home, assuming their credit scores and incomes don’t change. This will<\/strong><\/em> eventually put pressure on housing prices – and if rates continue rising, Holter says that at some point it is<\/strong><\/em> going to “bust the housing bubble<\/a>.” The only question is: What’s that magic number?<\/p>\n

\"\"<\/a>\"\"<\/a>\"\"<\/a>\"\"<\/a><\/p>\n

Debit:<\/strong><\/span> As mortgage rates continue rising, it’s only a matter of time before everyday American homeowners begin finding themselves in the same situation<\/a> of soccer mega-star Cristiano Ronaldo, who recently sold a tawny New York City condo for $8.8 million – after paying almost $19 million for it in 2015. The big difference is that Renaldo, who is worth a billion dollars, won’t miss the $11 million he lost on his real estate deal.<\/p>\n

Credit:<\/strong><\/span> By the way, Holter warns that we are rapidly heading toward a world with price inflation<\/strong><\/em> in everything people need to live, and price destruction<\/strong><\/em> in the assets we own. In essence, this is the final act in the death of our current fraudulent debt-based monetary system. Even so, most people are going to be caught by surprise when the system finally kicks the bucket and their nest egg – representing a lifetime of diligent saving – goes up in smoke<\/a>. Only then will it become apparent to them that there really is no such thing as a free lunch – whether they’ve worked their tails off to earn an honest living … or not<\/strong><\/em>:<\/p>\n