30-Year Fixed: The average rate has fallen to around 6.11% as of Nov. 1, 2025, down from earlier highs in 2025. A year ago, it was 6.72%. So that is better than it was, but I went back to check what my mortgage rate is and at 2.55%, it should be near the historical low. CD rates are higher than my mortgage rate and it is less than the rate of inflation, so one cannot afford to pay that off early. That is why many homeowners are locked into the homes they have. Even divorcees share homes not wanting to give up their cheap mortgages. Rising home insurance costs, required for mortgages, are also spoiling the soup. The government shutdown temporarily disrupted the mortgage process as well. Realtors say the housing market has gotten tough … harder for buyers to get mortgages making it harder for them to get deals to close.

Realtors would agree with Fed Chairman Powell that the housing market is tightening. There is more demand than there is the ability to master affordability. There is some significant regional disparity in home sales. Florida may be the worst where 17.8% of closings fell through in September. Here in the Iowa Great Lakes region, realtor signs continue to be followed by sold signs, so the limited inventory is still finding buyers. Prices have come off highs as buyers gain leverage.

President Trump has suggested that a 50-year mortgage be created. They must think that would make homes “more affordable.” The 30-year mortgage was a development of the Great Depression and did have a positive impact on the recovery becoming the cornerstone to financing the American Dream of owning a home. Home prices have risen, represent consumer equity and it makes sense that President Trump wants to support them. The average home mortgage monthly payment has doubled from $1,000 to $2,000 month since COVID. I think that interest rates are more important than amortizing the principle on a 50-year mortgage. Tell me what the mortgage rate would be on a 50-year loan and we can determine if that makes a home more affordable.

Another problem here is that the age of the average first-time home-buyer has risen to 40. They would be 90 before the 50-year mortgage can be burned. That exceeds the actuarial life-span of the average American and means that payments would extend well beyond borrowers most productive years. The average age of first-time home buyers used to be in the 30’s so their last payment on a 30-year mortgage was timed with their retirement. Home equity was supposed to be an asset for retirement, not a liability.

President Trump has said that the Fed is too slow bringing rates down, which is why home mortgages are unaffordable. His Treasury Secretary, Sctott Bessent, says that the real estate sector already is in recession caused by the Feds tardiness lowering rates. President Trump wants the Fed to get crazy on interest rates reducing them 3%, which would leave 2.5% further to go. He wants to reduce the cost of servicing the U.S. debt and bring in new revenue from tariffs as his plan to keep the national debt from growing. If he can mute the increase in the deficit with tariff tax revenue, share tariff cash with taxpayers who then are expected to vote the way he wants them to and goose U.S. economic growth with loose interest rate monetary policy, then, in theory, the U.S. debt gets smaller as the economy grows in relative size. That is his plan.

President Trump is not yet in a position to lower interest rates himself but is working hard on it. He has added a couple lackeys to the Fed board and is chomping at the bit to replace Jerome Powell as chairman. Powells term as chairman expires next spring, and Trump is working on an early appointment of a successor who may initially be a shadow-chairman until they can install him as the real thing. The Fed is independent, and will be up to until when Trump gets a majority of surrogates on the board. Then he will be the functioning Federal Reserve Chaiman, and board independence will be a thing of the past. For him, it is an intolerable amount of power to remain left outside his purview.

China, once the largest foreign holder of U.S. Treasuries, has been incrementally liquidating them for some time. There is no reason to expect that will not continue. The US and China are decoupling as fast as either economy can handle the divorce. Most Trump trade deals have components that compel foreign investments in the U.S. Countries, such as Japan, now the top U.S. foreign creditor, may well liquidate a portion of those Treasuries to finance the required direct investment in their trade deal. Canada is repatriating cash invested in treasuries, shrinking its holding. Their new budget, called “Canada Strong,” inflates their deficit as they invest in Canada. They are cashing out U.S.-owned debt and issuing their own. That is not part of Trump’s plan but a response to it.

If and when Trump takes over the Fed and he initiates his loose monetary/weak dollar policy, it would have a very profound impact on “everything.” Our money would be worth less, and those with cash will have to find something they think will be a safe haven to park cash in. That could be anything other than cash, such as precious metals, crypto, even corn or farmland become possible havens for value. Savers with cash will get crushed. The idea will be to pay back the federal debt with cheaper dollars. The Fed is supposed to have two primary jobs, which are to maintain full employment and control inflation. The current Fed has been orchestrating a delicate balance trying to do both. President Trump’s new narrative is that there is no inflation.

Berkshire Hathaway is considered to be another safe haven. Its trend has diverged from the general market, moving in the opposite direction. When the S&P weakens, BRK firms and vice-versa. That should not be a surprise. Part of the reason for that is that it holds 30% of its assets, approximately $381 billion, in Treasury bills so when the Fed lowers rates, the value of BRK Treasury income declines. When you buy BRK, over 30% of what you own is a cash equivalent secured by the U.S. Treasury. BRK owns as many or more T-bills as the Fed does. A ¼% rate change is $95.2 million to BRK. These are extremely liquid. The rest of the BRK portfolio is in stocks of profitable companies with earnings. Recent BRK earnings surprised to the upside. These companies are able to pass on rising costs to their customers. We are talking railroads, insurance companies, utilities, energy and Coca Cola. No metals … preferring stocks with dividends, no crypto foolishness, no China as they liquidated BYD because it carried too much geopolitical risk and is divesting a Taiwan chipmaker for the same reason.

Buffett does not want to hold cash but is looking for the “right” kind of acquisition for long-term gain. He is an investor not a trader. The market will provide the opportunity eventually. Buffett’s metrics of valuation currently have equities way up there. They will come down when ready.