Jim Egan on the Mortgage Gap That's Dividing America
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Hello and welcome to another episode of the Oddlots Podcast. I'm Tracy Alloway.
And I'm Jill Weisenthal.
Joe, there's been this very long running now, it feels conversation about the health of the American consumer. Yes. You've seen all that commentary, right? So you see these headlines that are like consumer debt at a record high. And you see some of the sentiment surveys, which have for the past two years been coming in pretty bad. They started to look kind of bad when all the tariffs were announced again. They've improved a bit since then. And yet, consumers seem to, you know, pretty much keep doing what they've been doing for a long time, which is spending, buying houses, things like that.
Well, they're spending for sure. But this is the thing. There's all this dismal sentiment data everywhere you look. And yet, by and large, you know, you read like CEOs, you look at the retail data, et cetera. It's not like that terrible. Companies seem to be doing fine. But there are pockets of the economy clearly that are softening. There is rising inventory of homes. This is like one of the huge stories in the economy. So there are clear areas where high rates and stuff are having. But to your point, like it has not been some sort of linear story of people are depressed and the economy is flying.
But you're right. We have seen some signs of softening. And so, you know, we have to ask: is it is it gonna be different this time? Is it the start of some sort of real deterioration in the health of the US consumer? I have also seen some very interesting stats recently, specifically about consumer lending and mortgages and things like that. I've seen, for instance, that existing home stay sales are are down one point nine percent year to date and have recorded the lowest volumes by count at this point in the year since two thousand nine. Yeah. And when you hear those, you know, since two thousand nine dates, you start to get a little worried, right?
This is definitely the case. I saw something, I think it was from Redfin. They said there was a record gap between sellers and buyers in the housing market right now. Look, this is one area where the high rates environment, like there's clearly something going on. We haven't gotten like big, you know, when rates shot up in like twenty late twenty twenty one or whatever that was. Do you know, by the way, twenty I this occurred to me last night. Twenty 21 is kind of a long time ago.
Why is the American consumer still spending despite higher rates and economic uncertainty?
Like the like I w no, I was thinking about this last night because it's sort of a cliche to point out that the pandemic twenty twenty was a long time ago. But some of those really pivotal years where we got the surge of the rate hikes, we got the surge in inflation, even that's starting to fade into history a little bit. I don't know. I maybe just last night I was thinking about getting old.
And Joe, time is a flat circle, that's all I'm gonna say.
But there's something like, you know, house prices didn't p fall off a cliff when rates hike were hiked dramatically, which was a surprise to some. Like some people thought, okay, they're hiking rates dramatically, the housing market is gonna be affected. The housing market is the US economy, therefore the US economy will fall off a cliff. That did not happen. But there has been um this slowdown and lately we've been seeing like, okay, like rates are still high, even with talk of rate cuts, et cetera, they're still high. And there's clearly this sort of accumulation of household inventory, these imbalances that are emerging. I don't know, maybe we will get price declines.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–3:06
2
Why is the American consumer still spending despite higher rates and economic uncertainty?
3:06–18:48
3
How does the mortgage lock‑in effect create a split between ZIRP‑era borrowers and newer borrowers?
18:48–32:42
4
What are the recent trends in consumer loan delinquencies and what do they signal?
32:42–37:25
Speakers
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