Why Your Mortgage Rate Should Be 7.9%

The Sell for 1 Percent team breaks down the latest Fed meeting, where three of twelve governors dissented and wanted to raise rates. While the best-case mortgage rates are around 6.625%, most buyers are seeing rates closer to 6.875%. The real story is the mortgage spread, which is compressing volatility—without this buffer, one analyst suggests rates today would actually be closer to 7.9%. For Columbus sellers, this means pricing is critical, as aggressively priced homes are getting multiple offers while overpriced listings sit on the market.

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Full Transcript

Hey there, everyone. Jaime with Sell for 1 Percent Realtors. It is July 30th, 2026, and we are here for a market update.

Give everybody that’s been tracking the real estate market here in Columbus, Ohio, and maybe elsewhere as well, a nice little market update. Joined as usual by the gang, broker Dave Barlow, Jaysen Barlow, and Rich Cercone at Highlands Mortgage. I’m still getting used to that.

I know that’s been a recent merge there, so I wanted to get into it here this morning. And Rich, what do you got for us on interest rates? I thought I heard that there was a delay on a couple of the reports that were supposed to be coming out. Do you guys have any updates for our viewers and followers? I didn’t catch the story about the delay, but to summarize, yesterday, July 29th, there was a Fed meeting and a Fed announcement in which Kevin Wersch, the new Fed governor, came out and said that we were leaving rates unchanged.

So on the surface, well, that’s good, but there was three dissenting votes out of the 12 Fed governors. Three of them dissented and wanted to raise rates. The sentiment still seems to be with the market that the next move of the Fed will be up, not down.

It’s just a matter of when that will happen. And as we’ve always said, the mortgage market is forward-thinking, and the forward-thinking right now is somewhere out there in the not-too-distant future, there will be rate increases. So in answer to that, the mortgage-backed securities did not have a good day yesterday.

We’re just getting started today, not sure. The 10-year Treasury, still in the mid-460s, back before the war, the 10-year Treasury was in the low 400s, or low 4s, rather. So we’ve seen a big – even if the Fed doesn’t raise rates, as one analyst said yesterday, that the Treasuries are doing the work for the Fed by raising the yields.

The bond traders’ yields are rising because the bond traders are convinced that the Fed is concerned about inflation and will at some point raise rates. So mortgage rates are not doing what we all would like to see them do. They’re not 7 yet, but they are high 6s.

I quoted 6625, the one of Jaysen’s clients last evening, but they had that perfect scenario. First-time home buyer, good credit, lower loan amount, all those things, and I got them into a 6.625 rate, but generally we’re about 6.75, 6.875, and if you’ve got a bad enough scenario, you might see yourself with a 7 in front of your rate. So that is what’s happening right now with mortgage rates in the market, in terms of my desk.

I’ve seen a steady flow, but it hasn’t been busy, but I see onesie-twosies coming at me here and there. Another client reached out to me this morning. So there are buyers out there still, but not a robust buyer market like we see sometimes in the summer.

Yep. Yeah, you got – it also combines with the seasonal trends, where August is typically a little bit slower. The people I was listening to were talking about mortgage spreads and that if this was 2023, we would be at 7.9% right now with interest rates, but because the mortgage spreads have taken a lot of that volatility out of rates, that’s what I guess they’re designed to do is compress the volatility both ways, that it’s been a great year for the mortgage spreads, and we’re at 6.7, 6.8, and that typically we get up this high, you see buyer demand kind of fall off.

And so that 6.6, they say that that magical number where below 6.6, demand increases, and above 6.6, that’s when you see it kind of going up. And yeah, the market’s doing the dirty work for the Fed. The hawks are in control now.

I think that President Trump made a miscalculation when he tried to take over the Fed, because all he did was upset these people that had been there for a long time. They’re not going to do anything to help. And they were talking about how oil prices come down, that’s actually inflationary, because people are going to spend more money.

Wage increases are inflationary. So now that’s bad too. So I mean, all this stuff is like flipped upside down.

Everything’s inflationary. That’s one thing though it does help is that I guess wages have outpaced home price growth this year. So people are able to afford these prices because they’re making more money.

So that’s good. On the listing side, I mean, things are hot and cold. Some of these listings are, you get punished if you’re not perfect or you’re a little bit reaching on price.

And as I have sellers that started a little bit on the higher side, as we come down, you can feel the showings pick up. And then the ones that are priced aggressively out of the gate, those ones seem to do pretty well. The client that Rich was talking to last night, it was first down the market, two showings, two offers.

So market’s not dead by any stretch. I think the headlines are way worse than what reality is. Not a bunch of looky-loos, people are pulling the trigger.

Was that house last night, was it in great shape, updated, everything top-notch? Is that what the situation was with that? I also think it’s very affordable. That one is lower than everything else in that neighborhood. And it was in very good shape.

They had built a roof over the air conditioner. It was PVC frame, and it was zip tied to the top of the air conditioner, having a metal roof slanted away. And my comment to them was, it’s like when you buy a car, you look in the that they changed the oil on time.

I’ve never seen somebody put a roof over an air conditioner. It’s like, these guys were taking care of this house. Everything was in really good shape.

There was 500 termite bait stations around the outside of the house. And so I was like, well, either they’ve had a really bad termite problem, or these people are just way over the top with being preventative and taking care of stuff. So we’ll find out at the home inspectorate.

Good talk. I thought I lost you guys. What are you seeing, Dave? I was looking at those mortgage spreads.

He’s prompting, trying to prove me wrong with AI. No, we’ve had that conversation with Rich in the past, where it seemed like you could always count on whatever the Fed rate was that the mortgage rates were about a percent higher. And so if the Fed rate was 5%, then interest rates on the mortgage side was about 6%.

And so when you were saying that a couple, three years ago, that the rate today would be seven something, I was like, oh, that’s kind of interesting. And what I’m seeing on the mortgage spread just real quick is that in March or May of 2021, the mortgage spread was 1.28. So whatever the Fed rate was at 3%, then the mortgage was 4.28.

And so we kind of saw that with the Fed back then was, I mean, they were at zero, weren’t they at one point? Yeah, during the COVID era, yes. Yeah, I think that because they were talking about inverting and it actually going negative at some point, and that would explain why people had a listing appointment yesterday. And they’ve got 2.7.

And they’re like, yeah, we really hate to give up this rate. And then it elevated very quickly to May, I’m sorry, November of 22. So May of 21 to November of 22, it went to 2.81%.

So again, if the Fed rate was whatever, 2%, then your interest rate was 5.81 or thereabouts. And so it’s interesting how that spread over time has… And I guess, Rich, I don’t know if you have the answer to this, but what causes that mortgage spread? Is it supply and demand? I think that’s true to some extent.

I don’t have a perfect answer to start out with, but I can theorize that it is supply and demand. It is market sentiment to some extent in the fact that, again, the market is forward-looking and what they see on their horizon, regardless of the current rate, what they see in the future sometimes is more important than what the current condition is. And that’s where we are right now.

The future doesn’t look bright to some of these bond traders. They don’t like the war. They don’t like the oil.

Yeah. And it’s where we are right now. And also, the news on the complex, you get three headlines that all kind of counterdict each other.

And I don’t think that the market likes any of that kind of stuff. The mortgage spread is the difference between the interest rate charge on a loan and the yield on the 10-year treasury note. So that’s what the mortgage spread is.

And according to Fannie Mae, it’s caused by prepayment risks, market volatility, and the origination costs. And so that’s what causes that. But my understanding is that it’s designed to take out the volatility so that if things were to spike, that spread can grow and make sure mortgage rates don’t spike along with the 10-year treasury note.

Well, I’m guessing that federal regulations also have a lot to do with what you as a mortgage company can charge. I know it’s become tighter and tighter and tighter, just pretty much everything. Well, yeah.

I mean, the yield on what we’re really looking at in mortgage-backed securities, and the 10-year is loosely tied to that. So when you see the 10-year going up in rate, then the mortgage-backed securities are probably having a bad day as well. And yeah, I mean, I think there’s a few forces at work right now in the world of mortgages.

And one of them is I firmly believe that the powers that be at the big banks and Fannie and Freddie, they don’t want to see some of these mortgages pay off. That’s another incentive. They don’t want these seven and high six rate mortgages to pay off because those mortgages are a nice counterbalance to the twos and threes that we experienced back in 20 and 21.

And the yield on these mortgages has gone down. In other words, the profitability that a mortgage company like ours can see is definitely taking a notch down. We’ve got to work on really thin margins right now.

So it’s tough to pay closing costs for a client on a refi like we used to be able to do. We just don’t have the spread and the margin to be able to do that. You’re looking like you’re a little skinnier there, Rich.

You’re not making as much money. Yeah. Well, I’m still finding a way to get food though.

A good Italian boy always finds his way to the plate. We were talking about this the other day. Eggplant Parmesan.

You could grow it in your backyard. It was easy depending on where you’re at in the world. You grow the eggplant, you grow the tomatoes, you grow the garlic and onions, and you put it all together and buy a little bit of Parmesan cheese, and you got yourself a nice meal.

I think that all the food we grow is out of necessity. Well, the discussion is, Mr. Contrarian.

Just saying. That was a heck of a statement. If you couldn’t afford to go back in the day, you couldn’t afford to go to the butcher shop to buy a veal or a chicken or some port of meat, you always had eggplant because you were growing it yourself out from a seed.

It didn’t really cost you a whole lot. God gave you the rain. God gave you the dirt.

You got an eggplant. Go ahead and counter that one. Let there be eggplant.

Yeah. It was easy and cheap. That’s the whole key when you got a big Italian family of 12 or 15, and then you invite the whole rest of the other family.

All of a sudden, you got 80 people to feed. Can you go to the butcher shop? No, but thank God you grew 80 eggplants and had the foresight. Some of those old ..

Have you ever seen the movie Godfather when the godfather died in the garden? Get the hint. This is what people used to do. Not like you.

You go to McDonald’s, because it’s now a $3 hamburger. It used to be $1. Family meals.

Yeah. Chase the grandkids around the garden. We always had a big garden.

Yeah. That’s when he had the orange peel in his mouth. Yeah.

There you go. That’s the way people used to live. I still live that way.

We still grow all of our food in the backyard. You do? Yep. Lots of eggplants, lots of strawberries, blueberries.

I had to kill all the varmints that come in and steal my vegetables. Yeah, I tend to be feeding all the varmints. We’ll have a picture of your backyard next week’s show.

Okay. There’s a bunch of dead grass. My grass is great.

A week to fix my lawnmower. The grass looks great. I was admiring it this morning.

I was thinking to myself, is this something all men do? They put their lines in the yard when they’re done, how proud they are of their lawn they just cut? Not me. Absolutely. Nope.

Have no interest. The only thing I like to do is cut it in a different pattern each time. You can see your lines.

Horizontal, vertical, 45 degree, then flip it around. Yep. I do the 45 degree different times, and I get that diamond look.

How many acres do you have out there, Dave? We’re just over, I think, three thereabouts. Okay. A lot of it’s got pond and house, driveway, pole barn, stuff like that.

I started cutting grass when I was nine, and had to do it for free. My dad had a 24-inch Craftsman lawnmower with no power drive, with a bush. He had about a half acre.

You’re out there in the summertime. I feel both ways. Yeah.

I just absolutely don’t like cutting grass, even on the zero turn. I’ve tried lots of different things, smoke a cigar, drink a beer, listen to podcasts. None of it helps.

Well, at least you were in Ohio, where you had flat land. I was in West Virginia, cutting grass like this and like this. Going up the mountain.

And that’s not an exaggeration either. Well, no. No.

We had about three acres, and it was all by hand. I started when I was 11 years old, and by the time I got to the back end of the property, it was time to start cutting the front end of the property again. I was going to say, you cut a section a day after school or whatever.

One section, one section, one section. And then if the lawnmower worked or not. We had one of those..

What were the lawnmowers that were really popular back then? The green ones? Lawn Boy. Lawn Boy. Yeah.

We had a Lawn Boy that sometimes worked and sometimes didn’t want to work. I guess it was a good day for me. Lawn Boy didn’t work.

Couldn’t cut grass. Lawn Boy was the first one to come out with the fuel oil mixture. And that had a lot to do with it not working correctly.

Right. So. You guys still fight that gas problem with your lawnmowers and..

Not me. Not me. I put top-tier gas into my mouth.

There it is. There it is. Did you know you can put 15,000 eggplants on three acres? Yeah.

You could feed a village with eggplant. Jaime doesn’t eat eggplant. How many cows do you think you can put on three acres before they would eat up all..

Well, look it up. I’m guessing you probably have two to three cows per acre in order to have enough grass for them to eat. So.

But the cows will feed a lot of people. An eggplant, I’ll eat that in one sitting. About 15,000 eggplants? How many eggplants would you eat in one sitting? It says one cow-calf pair.

Let’s see here. One cow plus her calf on three acres. Oh, okay.

So you get one cow. And if you’re feeding them corn, you can do three cows. Three plus cows.

Oh, okay. Well, let’s feed them corn. And then the money you think you’re saving, you’ve now burned up in corn.

Well, I’m pretty sure that the corn they eat is not like nice corn. The farmers aren’t giving them top-tier corn. All the leftovers.

Still cost them money. Yeah. I’d take the 15,000 eggplants.

So, there you go. I would too. Leave a comment below if you would.

How many chickens can you get? One and a half cows versus 15,000 eggplants. I would bet. How much? I mean, we bought a half a cow.

You got a half. I got a half. I still have that.

Okay. But of all that meat, I mean, is that 15,000 meals? No. You could even store 15,000 eggplants.

You have to be like your mom with her eggs. Just give them away. Give them away.

Constantly give them away. They just keep coming, like Newman in the mail. It just keeps coming and coming and coming.

I mean, you can make a lot of chicken sandwiches on three acres. Well, here’s a question for you. You can get about six to eight chickens per chicken.

Let me ask you this question. How much would 15,000 eggplant seeds cost you? Well, they come from God. They’re free.

No. You got to get them to get started. I mean, I bet you, what’s that? Like 30 bucks? 50 bucks for 15,000 seeds? And that’s your whole expense.

You get 30,000 chicken sandwiches a year out of your three acres. I love my chicken math. There you go.

Well, you can get a McEggplant sandwich. There you go. There’s your golden egg for the day.

That would sell. Yep. The old veggie burger.

About 200 bucks, you get 15,000- 200 bucks. Okay. All right.

You want the open pollinated heirloom, you’re about 100 bucks. Got to have the heirloom because they’ve not been genetically modified. Those are all things you learn when you become a prepper.

McChicken math and eggplant math and a little bit about real estate. And some top-tier gas thrown in for good measure. There you go.

Gas is struggling to stay below $4. Although I saw it come down yesterday a couple places was like $3.79. So, I don’t know what happened there, but I did see it come down a little bit.

$3.99 was top-end, but we’ll see. Yeah. Not to worry, everyone.

We will be back next week to let you know on the gas prices if we’re over that $4 threshold. They won’t be. Yeah.

And also stay below 10-year bond yield and we’ll keep you guys appraised as to what we’re seeing on the ground in real estate. The price of eggplant seeds. Both with home sellers and home buyers.

I buy my eggplant seeds with gold bars and silver coins, Bitcoin, no taxes. I’m from the old world. I did see this, guys are selling a pirate ship.

Three pirate ships with working cannons for $1.5 million. Me and my friends are trying to raise money right now to buy these. Please visit our GoFundMe page.

Times are getting tough. Jay’s looking to move to a pirate ship. Are these floating or are they sunken? No, they’re floating.

Okay. I got some land in Florida I’d like to talk to you about. I’m not interested in Florida land, but if you’ve got a pirate ship, give me a call.

I’m going to sell the Caribbean. I would like to put one on the pond. Drinking rum and eating eggplants.

I would definitely like to buy one for the pond. With real cannons, we could use them on the 4th of July. It would probably be safer than your firework show, and I doubt it.

The old cannon filled with black powder. Don’t know. All right, Jaime, go ahead.

Finish this up. Yes, we’ll be back next week and keep you guys updated on the real estate market here in Central Ohio. I guess all of Ohio, really.

Please like, follow, comment what you would prefer. Eggplants or one and a half cows. Or McChickens, yeah.

Or McChickens. Reach out to Jay to help him with his GoFundMe for his pirate ship. We really appreciate any tithing you can provide there.

Get him on a boat and get him going. Yeah, get him out in the middle of the ocean. Thank you guys so much for joining us this week and we will be back.

I appreciate all your guys’ time. Hey, there goes a grandkid. Oh, she’s here.

Wait, let’s get her in. Yep, there she is. Say hi, Amelia.

Hey, hey, hey. Say hey, Dave. Hey there.

Say thanks, everybody. Ask her what she thinks about interest rates right now. Amelia, what do you think about interest rates? Oh, we got the puppy dog.

You think interest rates are going up or down? The whole zoo going up or down. She says down. Hey, there you go.

I’ll take her word for it. It’s good news. Okay, say bye to everybody.

Say bye-bye. Bye. Bye, everybody.