Episode 42 - 10 year Treasury Breaks 3% for First Time in 7 Years

HUGE jump in US Treasury Bond interest rates over the pas 20 months or so. Now, lots of people will conclude things about the investing market, how this increase affects them. And there is a lot to be said about how this affects your portfolio. BUT, what gets overlooked during this times of increasing interest rates is the affect on the mortgage/real estate market as well. Think about it like this: Couple want to buy a home. They have a monthly budget of $850 for that home. When interest rates were what they were in July 2016 they could have afforded a $250k home (just using the 10 year rate as our proxy for the interest rate they paid on their mortgage.) Now, though, with the 10 year at 3.05%, that same $850 could only buy a $200k house! So, what happens to the couple who bought a house in July 2016 for $250k fully leveraged, i.e., no equity, and need to sell it today?