1. Home
  2. |
  3. Mark’s Blog
  4. |
  5. Mark's Market Update
  6. |
  7. Rates are Moving Up!...

Rates are Moving Up! Why?

Mark’s Market Update – 5/25/2023

​Do YOU think it’s a good idea to borrow money to pay your bills?

No – arguably, it’s a TERRIBLE idea…yet, that’s what this country has been doing for decades (but that’s a different argument for a different time over a cold beer). The old phrase “Borrowing money from Peter to pay Paul” applies, here.

Currently, we’re at an impasse in Congress that *should* get worked out, but we’ve got a ticking clock on this in that the US Treasury is expected to run out of money to pay the country’s bills (including servicing the existing debt that we’ve borrowed) by June 1st (six days from now) and the only way to fix that is to raise the debt ceiling so that the US Treasury can borrow more money to pay its bills, including borrowing money to pay the interest (and only the interest) on the money it has borrowed in the past to pay it’s past bills.

Like I said – it’s a terrible idea.

So, while this impasse is in play – mortgage rates have been climbing because of a double threat of what problems can happen if we don’t increase the debt ceiling and the country defaults on its current obligations (credit rating downgrades have already started), AND because the Fed may not be done with interest rate increases. There’s a chance the next Fed meeting may result in an increase of 25 bps, and not a “let’s skip an increase and watch” as everyone was kind of thinking based on the commentary from the last meeting.

So – rates are up – about .5% across the board over the last 10 days or so – and I expect that they’ll continue to inch up until the debt ceiling problem gets resolved successfully…

…such as you can call borrowing money from Peter to pay Paul a successful resolution of the debt-ceiling problem.