Page 28 of Generation Lost

“Sorry. Okay, listen, several factors can influence the interest rates offered to mortgage borrowers. We already know that. Things like inflation, economic stability, and the bond market just to name a few.

“When inflation is high, the purchasing power of the dollar decreases. Lenders have to compensate for this by increasing interest rates so they can maintain their returns. Of course, if inflation is low, mortgage rates will tend to be better as the lender because you don’t need to adjust rates as much to protect against inflation.”

“I actually think I’m following this,” frowned Jean.

“The state of our economy plays a crucial role in mortgage rates. When the economy is unstable, like if we have a recession or financial crisis of some sort, lenders see lending money as riskier, and the rates increase. Seems obvious, right?”

They all nodded, just staring at her, waiting for her to finish.

“If there is a growth period for the economy, rates might be low enough to encourage borrowing, and that stimulates our economy. Bond markets are weird. I think so, anyway. Mortgage rates are tied to the yields on long-term bonds, say, like a ten-year treasury bond.

“When bond yields rise, mortgage rates tend to follow suit. Higher bond yields attract investors, leading to increased borrowing costs for lenders, which are then passed on to borrowers. Make sense so far?”

“I think so,” nodded Jean and the others. “Keep going.”

“Okay,” she smiled, sitting cross-legged with a big smile. “The Federal Reserve influences mortgage rates. The bank uses various tools to manage the money supply and control interest rates.

“When the Federal Reserve wants to stimulate economic growth, it may implement a particular policy that involves lowering interest rates. They do this so it can lead to lower mortgage rates, making it more affordable for individuals to purchase or refinance homes. Common sense.

“But when the Federal Reserve wants to curb inflation or slow down economic growth, it may pursue a different kind of policy by raising interest rates. This increase in interest rates can result in higher mortgage rates, making borrowing more expensive and potentially impacting housing affordability. It drives the prices of houses up, the demand down, and they get all the money from this.”

“The government wins,” whispered Miriam.

“Oh yeah,” laughed Victoria. “They win big time! Everyone thinks that inflation isn’t something the government wants, but it actually helps them to balance things sometimes. It’s all pretty stupid. I have a better plan.”

“Victoria, I know you do, honey. But what else?” asked Jean.

“Well, the Federal Reserve's decisions on interest rates don't directly determine mortgage rates. But, their actions influence the overall interest rate environment, which in turn affects mortgage rates offered by lenders.

“If the Federal Reserve manages economic trends and monetary policy, it can help to maintain stability and balance in the mortgage market. Ideally, it supports growth and manages inflation, which would…”

“…ensure that credit is available,” said Jean.

“Yeah, exactly!” smiled Victoria. “But it gets better. See economic trends and the housing market is super important for someone deciding on a mortgage. If the economy is strong and we have low unemployment, the consumer spends more, and home prices rise. If we have higher unemployment and decreased spending, the housing prices fall. It’s that simple. Low interest rates make houses more affordable. High interest rates make them less affordable.”

“But no matter what, the government wins,” said Tinley. Victoria nodded, smiling at the room of her favorite people.

“Yep. The government always wins.”

CHAPTER NINETEEN

“They’re playing a game,” frowned Gaspar. “They’re playing a game and didn’t think any of us would find out about it. They made sure, somehow, that the criminals got control of these mortgage companies. They placed stipulations and clauses in the mortgages that would increase interest rates to the point of unaffordability, knowing they could then foreclose, sell the land for double the value, and make all their money back plus some.”

“I’m going to bet Uncle Sam was going to get a chunk of the profits from all of this as well,” said Ian. “But why the weapons manufacturing? Why allow the drugs, trafficking, all of it?”

“Maybe that was part of the agreement,” said Nine. “Turn a blind eye to what they’re doing, but they help with the mortgage rates. The administration is taking a beating on inflation, unemployment, all of it. This was their bright idea to recover.”

“It’s a fucking stupid idea,” growled Ghost. “Exposing it won’t work. They’ll spin some bullshit that will fool the general public. Think about it, Jean and Victoria had to explain this shit to us three times to understand it. Most people won’t get it. They’ll say, ‘well, that’s life, up and down,’ blah, blah, blah.”

“Blah, blah, blah?” smirked Gaspar.

“I’m tired of this shit. I’m tired of thinking we’re making headway and we’re helping, only to discover that we’re not. We might not be able to do shit about the mortgage situation, I mean, unless we’re willing to buy up every damn independent lending company in the whole country. But we can damn sure do something about the other shit.”

Sly ran into the room with a sheet of paper in his hands. It actually turned out to be a photograph.

“What’s that?” frowned Nine.

“Got a call from a contact on a destroyer near Jacksonville. Said they passed a freighter going out to sea that was stuck due to low tide. Nothing they can do until the tide rises again.”

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