Rate Expectations

Planet Money

NPR

Business, News

4.6 • 29.8K Ratings

🗓️ 13 September 2024

⏱️ 27 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

The Federal Reserve raised interest rates to get inflation under control. One side effect is that taking out a mortgage to buy a home has gotten very expensive. That's especially a problem for some homeowners who managed to get a lower mortgage rate years ago. They have a sort of... champagne problem. Or, "golden handcuffs" as it's called.

These homeowners may find they are "locked in" to their current home. In order to move to a new home, they have to take out a new mortgage at a much higher rate. It is one of the many problems plaguing the housing market right now.

The Fed is expected to start cutting rates next week. Will the golden handcuff mess finally start to unlock? And what does it mean for people looking to buy their first home?

On today's episode: We go deep into the golden handcuff problem and why it matters for everyone (including non-homeowners). We have FOMO about a big economic symposium in Jackson Hole, Wyoming. And we contemplate how to pronounce one of the most important interest rates in the economy: The IORB.

This episode was hosted by Kenny Malone and Alexi Horowitz-Ghazi. It was produced by Sean Saldana. It was edited by Jess Jiang and fact-checked by Sierra Juarez. Engineering by Cena Loffredo. Alex Goldmark is Planet Money's executive producer.

Help support Planet Money and hear our bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.

Learn more about sponsor message choices: podcastchoices.com/adchoices

NPR Privacy Policy

Transcript

Click on a timestamp to play from that location

0:00.0	Support for NPR and the following message come from Boland Branch.
0:04.2	Experience your best sleep in the softest organic cotton sheets.
0:08.2	Get 15% off and free shipping on your first set of sheets at Boland Branch.
0:12.4	Com with code NPR. Exclusions apply,
0:15.2	Seesite for details.
0:17.0	This is Planet Money from NPR.
0:19.8	We are mere days away from a big Fed announcement.
0:26.6	By all accounts, Jerome Powell, chairman of the Federal Reserve,
0:30.1	is expected to cut interest rates next week.
0:33.0	And people expect that because he's basically been saying this is going to happen for months.
0:39.0	Yeah, I mean, albeit in these very fed-speaky you know like this it will likely be appropriate to begin
0:46.8	dialing back policy restraint at some point this year.
0:50.8	Translation rate cuts are coming soon.
0:54.2	Possibly.
0:55.2	Yeah, here's another one.
0:57.2	If the economy evolves broadly as we expect, most FOMC participants see it as likely to be appropriate to begin lowering the policy rate at some point this year.
1:07.0	Yeah, you know, lots of people have been watching that and hearing this stuff and interpreting it as interest rates are going to drop soon.
1:14.8	You know, of course, fancy financial types are watching this, but also regular people.
1:20.0	Yeah, because changes in interest rates can affect everything from the amount you earn in a savings account,
1:25.6	to the interest you pay on a credit card, to the rate you get charged when you take out an auto loan.
1:31.2	But, but Alexey, I would argue, I think both of us would argue, there is one group of people in particular who have been waiting for the Fed to make a move more than anyone else. That would be home owners. If you had to describe your place in a couple of words, what would it be?
1:50.4	Um, cozy? Is charitable? Uh-huh. Cozy is charitable. This is Brenda Miller from Los Angeles. She bought her house in 2010 when she and her husband had one child.
	...

Transcript will be available on the free plan in -115 days. Upgrade to see the full transcript now.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from NPR, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of NPR and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.