Is the national debt pushing mortgage rates higher?

Name: Is the national debt pushing mortgage rates higher?
Uploaded: 2026-08-21T08:00:39+00:00
Duration: 21 min 44 s
Channel: HousingWire

00:10Welcome, everyone. I'm joined by lead analyst Logan Motoshami to talk about whether federal

00:15debt is pushing mortgage rates higher. Before we dive in, here are the top five trending articles

00:20on HousingWire.com. First is why the 2026 mortgage layoff cycle looks different. Followed by Logan's

00:28article, this is why the US doesn't have a housing shortage. Then we have why starter homes got

00:34harder to build at scale. And MLS critics call it anti-competitive. These brokers say it helps them

00:40compete. Finally, we have better rolls out a poison pill as Garg fights for control. Okay, we are ready.

00:48Logan, welcome back to the podcast. Or maybe you should welcome me back since you've done it.

00:52Twice in one week, Sarah, people are talking. People are talking. They're saying, you know,

01:00they're going to give Logan the show all by himself so he can do it twice a day, seven days

01:04a week.

01:06Well, you're not getting rid of me that fast, but I do appreciate you jumping in. That was really

01:10great yesterday. And I really enjoyed the episode. So let's get to today's topic because, wow, it is

01:16all over mainstream press. I know people are talking so much about this $40 trillion debt.

01:22So let's get to it. So let's just take the last two years. And last year, in 2025, nobody had

01:33mortgage rates going lower. They had it going higher. Because of the, you know, $36 trillion in

01:40debt, there was a summer camp group of men, influencers, mostly tied to the White House, that

01:47were touting that we needed to create a recession so we could refinance all this debt. We had 10

01:52trillion dollars of debt that supply was going to hit. People said, there's no way we can handle

01:58that. All these things that are happening this year were happening last year, except last year,

02:06mortgage rates in the 10-year-old had a lower trend the entire year. We had the same issues

02:14this year as we did last year, except what's the big difference? What happened this year?

02:20The Iran conflict has to be the answer. The Iran conflict is one. But I always also say that

02:27last year, the Federal Reserve went into 2025 saying the labor market was robust, right? Beth

02:34Hammock. It's Beth Hammock's Federal Reserve. So we're going to use her as her example. The labor

02:38market's robust. Everything's fine. So when the jobs data started coming in, missing estimates and

02:44negative revisions, all the way to the point that we had a few jobs being lost, the bond market does

02:49what it

02:49always does. It takes the 10-year yield lower. We had all, we had a massive amount of debt,

02:55X amount of interest being paid, didn't matter. Bond yields went lower. What happened early this year?

03:02The 10-year yield went below 4%. This year, it's not like federal debt or the interest or any of

03:07that

03:07changed really much from the start. 10-year yield went over under 4%. Why? Because people were worried

03:13about private credit and AI taking all the jobs. But three things that are different in 2026 versus 2025.

03:23So this is why I don't really talk about the federal debt being an issue. I look at 65%

03:28to 75% of where

03:30the 10-year yield can go is Fed policy. So number one, the Federal Reserve wrote dissertations telling

03:36everybody, we don't care that the job growth is low. We believe that the break-evens, the amount

03:41of jobs needing to happen to keep the unemployment rate low is, to me, I read it as 33,000.

03:48Beth

03:48Hammock, who really runs the Federal Reserve, said it's 20,000. So that's number one. The labor data got

03:53better on their terms. Jobless claims are still low. Unemployment rate is at 4%. That's number,

03:58that's to me is the number one reason why rates have moved. Then on top of that, the inflation data

04:04was

04:04a little bit worse than what people thought going into the conflict. And then the conflict happened.

04:11We're sitting here today. Trump is saying he's going to do economic warfare to a degree that

04:16we've never seen done on Iran in history. Oil prices went up. Diesel prices are back to highs again.

04:23But the 10-year yield does not like conflict headlines. Why? I mean, the Federal Reserve has

04:29said this. The hawkish Federal Reserve says we don't like supply shocks. So here it is.

04:32So there's not much of a difference between federal debt last year to this year. But the variables that

04:42I look at to move with the 10-year yield and the channels change noticeably. The Fed was talking

04:49about rate cuts last year. The Fed is talking about rate hikes. That to me matters more than these federal

04:56debt headlines and the deficit and all that. And I always go back to the 1990s. 1990s, I had blonde

05:02hair. I was auditioning for Levi's commercials. A lot of crazy stuff.

05:08No one understands that, by the way. We'll just throw that out there. Okay.

05:11But there's a lot of things. But back then, federal debt was lower. Debt to GDP was lower.

05:17Deficits were lower. Deficits were lower. Rates were higher. And the 10-year yield higher was

05:21for the whole decade. So I cannot subscribe to this notion, all these headlines. And Treasury

05:30Secretary Scott Besant is trying some more gimmicks to try to calm down volatility. We talked about that

05:36in the last podcast. I just look at that as a defensive mechanism. I think some people were told

05:41like, this is going to push rates lower, like in a meaningful way. Just think of it as a defensive

05:46mechanism. With all that said, it's not the federal debt. It's these issues and the Federal

05:52Reserve itself changing policies with the conflict, with inflation running, and unemployment rates at

05:584% and nominal growth still elevated. Those are the things that are pushing yields higher. And I mean,

06:05I can make a better case that the 10-year yield is still not really priced normal. I mean,

06:10you know, five and a quarter to 5.35 with where nominal growth is and the unemployment rate and

06:15wage growth. And that would be more realistic than what we have here today. So I'm just not a big

06:23believer in, this is all about the federal debt, because it gets great headlines, the interest payments

06:28and everything. Global bond yields are all kind of rising together. But there are variables that are

06:34different this year than they were last year.

06:37Okay, and I appreciate you tying that to mortgage rates, because that's what our audience cares about.

06:42It's what you and I want to talk about. Let's step back just a little bit. Because I know this

06:47since

06:48we've been, I've been in rooms where you're on stage and people ask you this, just in general on the

06:53federal debt, does it does it worry you from just the economic, you know, outlook of our country that

06:59we have so much debt and the interest on that debt. And this is why I think people don't know.

07:06And I

07:07still, I'm not sure I understand why this is not troubling to you.

07:11Okay, so if you go back in the history of America, politicians have used federal debt as a boogeyman

07:19for over 100 years. Now, people have been plagued for 100 years, and they're dead. I'm pretty sure

07:28everyone in America who's worried about federal debt is going to die worrying about federal debt.

07:33I only care about what the bond market is telling me. And if I'm worried about federal debt,

07:40then I need to see bond yields actually start to aggressively go higher like it does in third world

07:46countries. You know, where, you know, if people remember, the European bond scare, all the way

07:55back in 2011, and Greece was Greece was attempting to leave because they need a better budget. I was

08:01like, go ahead, leave. Let's see how your currency does against a euro. We are the United States of

08:07America. We are the most powerful, wealthiest country in the history of the world. I always say

08:13maybe Cleopatra adjusting to inflation in her prime had maybe just as well. The bond market isn't going

08:19to treat us any differently than other countries that are older, mature, wealthier countries. But to

08:26me, I'm not worried until I see like Europe blow up, China blow up, Japan blow up. I sit here

08:35and I

08:35think why doesn't nobody talk about Mexico or Canada's debt or, you know, all these other

08:42countries, but we're the one that is broke. This is a boogeyman. This boogeyman is going to go to the

08:49graves with everyone else's boogeyman because I've not seen the bond market ever react. And here we are

08:54with $40 trillion in debt and interest payments and everything. And the 10 year yield, I can make a

08:59case that it's still lower than it should be. That's why I'm not worried about it because I

09:04don't want to be another American citizen who's been conned for a hundred years. And then when I

09:08die, go, oh my God, the federal debt never did anything. We are the wealthiest country in the

09:13world. The bond market is going to treat us better than anyone else. And today's a really good example.

09:18I think the 10 year yields at 471. Like if, if, if federal debt was an issue, yields would be

09:23exploding

09:24higher. Right. And it's just, it's, it's, it's, it's almost not fair. I mean, the dollar in a sense,

09:30you can make a better case that it's literally too strong at times and the world can't handle it,

09:35but I'm just not, I don't want to waste my life with this because I can't prove it. And because

09:41I

09:42can't prove it, I don't spend a second of it. But if Europe implodes, China implodes, Japan implodes,

09:49Guatemala implodes, Canada implodes, Mexico implodes, then I'll think about, okay, now we need to be

09:56really considered because it's not like the bond market doesn't know where debt's going.

10:01Mandatory payouts. And I wrote this article in 2019, you know, I said back then 70 trillion,

10:07$71 trillion of debt by 2060. This is before COVID and everything happened. And I was like,

10:13bond market just doesn't care. So I'm, that's why I don't ever waste a second of my life because I

10:21don't want to be that person who has sat for 20 years and tell me, Oh, you've got to pay

10:25more taxes.

10:26God, our tax rates are so low. Go look at the tax rates of everyone back in the 1950s,

10:31right? Tax rates are very low. The growth rate of inflation, right? I mean, if you took COVID out of

10:37the equation and tariffs out of the equation, what is the growth rate of inflation to be very tame?

10:42So I'm not worried about it, nor will I ever worry about it until all these things

10:48happen first. And I need the bond market to tell me, and there are no bond vigilantes because bond

10:53vigilantes need to make money and they just don't want to take the yields up higher because there's

10:58always appetite. I mean, we own most of our federal debt. I mean, that's what not a lot of people

11:02know.

11:02We own, if you go look at the breakdown, you know, for 30 years, China owns all our debt. If

11:07we sell

11:08our treasury, no, it hasn't happened. I can make a better case than a 10 year,

11:12realtor should be higher now. So that's why I don't worry about it. And until I see certain

11:18things, it's just not going to be part of my economic work.

11:21I think when you get to, you know, amounts to 40 trillion, it just kind of feels like monopoly

11:27money. Like it's just even hard to wrap your head around like what that means. And it just

11:33kind of feels unreal. How much financial wealth does U.S. consumers have? 200 trillion.

11:42Right. I know.

11:43If I, if I actually took the entire United States land, built everything, it's like 400,

11:49500 trillion dollars. We are the wealthiest, most powerful country. And we are not going to be

11:55treated worse than Guatemala or Mexico or Canada or Europe in the bond market. And today's a really

12:04good example. If where nominal growth is right now in inflation and wage growth and the unemployment

12:08rate, the 10 year yield should be higher, but it isn't right. We're not going to be like

12:14suffocating while Mexico's currency will blow up so much that they could buy Canada or, or, or they

12:20could buy California or Canada is going to be surging. Their, their currency is going to be blowing up

12:24higher and they'll co-buy New York. I'm not worried about that stuff. All I care about is how the

12:29markets are reacting in the markets. To me, we have never had like a big failed auction. We have

12:34levers that we can pull that, you know, anytime we want as well. So that's why I don't focus on

12:41that

12:41because think about how much life for those of you that are listening, that were petrified about

12:46federal debt, think about how much of your life was taken away by a bunch of boogeymen out there

12:51saying this story. So let other things happen first, then you'll get there. But trust me, other

12:57countries will start having implosions before we do, uh, or federal, our currency will be so worthless

13:04that inflation is going to take off like third world countries. I mean, come on, man, y'all only live

13:09once in this world. You still want to fall for this kind of thing out here. We are the United

13:15States of

13:15America. We have certain advantages that other countries, it's not fair. You know, I, I, I've,

13:22I've talked about this and it is not fair. Like some of the advantages we have. Why do you think

13:26the bricks want to get off the dollar and everything? You know? Um, so yeah, that's just

13:32always my take. And, um, uh, you take your 40 trillion versus my 500 trillion and my army's bigger

13:39than you are still. I appreciate you outlining that because I, I have heard, uh, someone ask you

13:46this at almost every Q and a that I've been at the, when, when you're on the road. So it's

13:50obviously

13:51something people, uh, you know, are worried about. They're not sure how it, how it affects their daily

13:56life or their business. Cause they've been lied to y'all been lied to for a long time. I mean,

14:01I could

14:01take literally, I take newspaper clips back in the forties and thirties and sixties and we're broke.

14:06We're a broke country consumers. For some reason, the wealthiest country in the world is the broken

14:11country. Y'all crazy. Y'all just crazy people out here. I mean, let's listen. The bond market would

14:17be yields would be exploding higher if that's the case. Now there's a time where the debt to GDP

14:24and issuance, maybe there might not be enough appetite for the U S I mean, the federal reserve

14:29could go in there and buy it if they wanted to, but this is, this has not been an issue

14:33for a long

14:34time. Now, when you have growth is blue, when growth is booming and inflation is booming and

14:39you have a supply shock in the late 1970s, right? Federal debt to GDP was much lower back then,

14:46but rates were a lot higher because inflation was running hot, uh, back then our labor force

14:51growth was, was, was booming back then. It's just, it's, it's hard to, to do this. And again,

14:56just imagine if there were no tariffs, zero, nothing, no conflict. What are we talking about

15:04today? Focus on things that actually matter, not on fairy tale stories. So you'll hear this

15:12reports, the 30 year yields is all this, but look what's happening this year. It's a complete opposite

15:17of last year, right? We have all this drama out here, you know, but it, but if you can tell

15:23me that

15:23the 10 year yield would be up here, if we had no tariffs, no conflict with Beth hammock telling

15:31everyone, Oh, we're only creating 20,000 jobs for both go, go good premise. Go ahead, put your name

15:37and face on that one. But I see how the market reacts to actual things that matter in our daily

15:43lives. Not this story. That's going to go to the end. And trust me, I I've watched men and women

15:49die

15:49with this. I would have watched men and women die with this theory all the way around.

15:53It's been here for over a hundred years. We are the United States of America. Y'all got to start

15:58acting like the most dominant, powerful economic force in the history of the world.

16:03Amazing. Thanks for walking us through that. Okay. Let's talk about some of the housing economic

16:07data, right? So I missed out on yesterday, asking you some of the questions about the,

16:11about the housing shortage and why we don't have a housing shortage here in the U S.

16:18By the way, somebody asked me, you literally get up at one 15 for those CNBC interviews. I said,

16:23yes, I do, but you look so alive, you know? So like one time somebody laughed because I'm wearing

16:28my silk shirts. It looks like I just came back from a club. I said, guys, no, no, it isn't.

16:32I do not

16:33try to stay up. If you have to do a one 15 interview, do not stay up the whole night.

16:37You got to go to bed.

16:37So what's, what's the strategy? You go to bed and then you wake up.

16:40The strategy, you go to bed as early as you can and you get up, you get the coffee ready

16:44and you

16:44just go with it. And trust me, guys, there's a, there's a whole portfolio of work that has to be

16:48done before you go on TV. So it is not like I'm, and it's, it's funny. Cause I am not,

16:53I am not a

16:54club guy. I'm not a bar guy. I don't drink. I'm literally in this room most of my life. Um,

17:00so,

17:00but it's, it's, it's, it's not natural. You just get up and you look like, you know,

17:05so it takes a lot of work, but, uh, to, to answer your question, you know, uh, hopefully

17:10when, when people read and looked at those charts, you know, uh, you, you could see why,

17:15you know, housing starts and permits are falling. Reality is if you had a shortage, then housing

17:21sales and demand would be rising. And then you have to build more homes. That's why I like

17:25to use the housing bubble years that we had a lot of construction is because new home sales

17:29are growing. And we go back to December 23rd, 2024 with that article I wrote, the home

17:34builders have a supply and demand problem now. Right. And that's because completed units

17:38got, you know, uh, to that 120 K levels and they just don't, they don't really push the

17:43lever and building homes. And that's decades and decades and decades of data on this. And

17:49I just don't think a lot of people have ever seen that chart. When I show them that chart,

17:52they go, Whoa, I say, yeah, look at that. You know, but, um, that was a shortage things,

17:59uh, in demand again, same story as always rates above 6.64 housing slows down. Uh, even

18:04we know we're positive year to date on sales. Uh, uh, the longer this goes on, uh, the more

18:11slow down, can it take us all the way to flat or even negative? That's been the story in

18:15the last few years. Thankfully, mortgage spreads are keeping rates under, under seven. Just

18:20imagine if rates are above 7%, like it's the same story. We don't really go anywhere,

18:24but, uh, I always look at this as a more healthier market because inventory is up price growth is

18:28cooling down. You know, you, you, you're creating a better, better base, but, uh, but so far,

18:33yeah, it's crazy to still say this a home sales are positive year to date, considering all the

18:38crazy things that have happened out there. And that's only because you hug a mortgage spread

18:42for that one. So hopefully that addresses the inventory and demand question because it's been

18:49a crazy week. There's a lot going on. And I think, uh, what, uh, treasurer secretary Bissette did,

18:54you know, I think, I think some people just thought that was like the beginning phase, but

18:58this morning conflict news, Trump doesn't want to do it. Oil prices went up. Diesel prices are

19:04almost back to a recent highs. It's a problem. It's a problem. The federal reserve have told

19:09everyone, right? So if you really wanted to address these things, you're not going to cut

19:14spending down or anything like that. But if the conflict ended and the tariffs never happen,

19:20we are all having a different conversation. So there are consequences to actions. If there are

19:24no consequences to actions and you can't, there's no checks and balances. So that's the real story.

19:30That's what I want people to focus. I could show you this. I could show you that, you know,

19:34the labor data got better under fed standards. Uh, inflation is running above target and then the

19:39conflict happened and there is your rate story, but I can even make a better case that the 10 year

19:44yield at five and a quarter to 5.35 would actually be like normal value to where growth is and

19:51inflation

19:52and the unemployment rate. But here we are, we're, this is just the world we live with.

19:56Whatever my view is, this is my view. Everyone could have a million takes on federal debt rates

20:01and everything. But my job is just to look at the data, uh, uh, and try to make sense of

20:06it. I could

20:06make sense of the actions this year by the conflict and the, and, and, and the, and the tariff runoff,

20:13but also the labor data didn't get worse. Uh, it's stabilized under the feds metrics. Those things,

20:19those things are tangible and real out there. The rest, the rest is storytelling.

20:24The rest is story time. Lots going on. We expect this to continue throughout the fall. That's why

20:30everyone should be meeting us at the mortgage banking summit on October 1st here in Dallas,

20:35Texas with you as our keynote speaker. And I think you have a discount for people, right? If,

20:41if they go under your name, Logan 10, yes. Logan 10, Logan 10, and you could get it. And again,

20:49we have a lot of, we have a lot of speakers. We have a lot of talented speakers. Um, again,

20:54my job is to give you the truth about what's going on at what stage of it. And this is

21:00just,

21:00it's things post COVID is things are just wild, right? You know, uh, I don't know if we would

21:07have been as exciting as, uh, as we are now in the last decade, the last decade was fairly boring,

21:13really not much was really going on. There's a lot of crazy headlines, but on the economic side,

21:17nothing until COVID happened. So again, I'm just trying to make sense. You, you could agree or

21:21not agree with me, but I'm just working off what the data tells me. Right. And that's just my

21:26interpretation of what's, what's going on. We appreciate it. And again, I will talk to you

21:32soon. Thank you so much, Logan. Pleasure.

Is the national debt pushing mortgage rates higher?

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