What factors are influencing the current world debt? As the new year begins, we are seeing the end of a cycle of low rates and affordable money from the Fed. Many sources predict that interest rates will be topping out at around 4% by the end of the year, which is half a point higher than it is presently. That rate is still comparatively low, but when coupled with higher housing costs, prices a lot of prospective buyers out of the market. If that combination reduces the demand for properties and prices fall accordingly, more people will then be able to acquire mortgages and afford homes. Determining mortgage rates is a complex task and tied to many things, not the least of which has been this long period of cheap money from the Fed. In the early 2000s, for example, the Fed made inexpensive money available for several years to keep the economy afloat and take the focus off of the aftermath of 9/11, the war in Iraq, the dot.com bubble, and other events happening in the world. That resulted in the Great Recession, and we have been experiencing parallels with the economy over the last several years. Does that mean this going to be a repeat of 2008? Not necessarily, as there are better products available on the market today than there were in 2008, but is the debt any different? Prolonged periods of financial market stability tend to set up the conditions for pronounced financial market instability. The stability causes assets to rise, therefore the amount of money borrowed against those assets rises too. When conditions change, and the valuation and actual cost of those assets drop, as is possible in China, what will happen with the risk involved in that debt and the world economy? Jeff’s guests include:

– Stock trader Oscar Carboni (LiveWithOscar.com) discusses how Wall Street is affecting the interest rates on the global market.

– Wendy Van Wessel of Kind Lending outlines the options available for non-QM buyers.

– Realtor Meredith Schlosser from Berkshire Hathaway talks about the advantages for buyers when purchasing in today’s market.