This week produced a run of rate numbers: a Federal Reserve holding at 3.50 to 3.75 percent with three officials voting to go higher, a 30-year Treasury at 5.27 percent, the highest since 2007, and a 30-year fixed mortgage at 6.66 percent in Freddie Mac's July 30 survey. [2][3]
Here is the household version of all of it: the wealth gap between renters and homeowners is now the widest ever recorded, as buyers are priced out of the market. [1]
The mechanism is not complicated, which is what makes it durable. For most American families, wealth is not a portfolio. It is a house, held for decades, paying itself down. Every year that rates keep new buyers out, the people already inside keep accumulating equity, and the people outside keep paying rent that builds none. The gap does not need a crash to widen. It widens fastest in exactly these conditions: high rates, high prices, and no distress.
One precision on the mortgage number, because it has been described several ways this week. Freddie Mac's own release states 6.66 percent, up from 6.58 percent, with the 15-year at 6.04 percent, and it makes no claim that this is a high of any particular period. [2] Various superlatives have been attached to it in coverage; none of them appear in the primary, so we do not print them.
What can be said is that the long end of the market is pricing durable inflation, that mortgages track it, and that the result is arriving in household balance sheets as a record. Rates fall eventually. A decade of missed equity accumulation does not come back when they do.
