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- Principal Tipping Points and Interest Rate Sentiment
Principal Tipping Points and Interest Rate Sentiment
Those living through fires, find joy where they look for it.
Todd Ballenger
March 21, 2025
“All the best games are easy to learn and difficult to master. They should reward the first quarter and the hundredth.”
Per Bushnell, the game of life is the biggest one that applies, but the game of repaying the mortgage is worth considering. At what point do you pay more principal than interest on a mortgage? It Depends. The big driver is interest rates. In this post by HOUSINGWIRE, they shared how quickly you get to the tipping point (less than 3 years) for those with sub 3% rates paying more principal than interest very early in their mortgage. That means they are building equity faster, which will help with future upgrades and purchases.
I created another one to show the difference in a 7% mortgage, and the point at which you are paying more principal than interest is much later (21 years) into the loan. One benefit of those ‘locked into their homes’ with low rates is they are building equity at hyper-speed, and that can be used to buy future houses (this could also help house values stay higher).
Always recommend you do your own research (play), so here is a simple amortization calculator so you can look at the columns and see for yourself where the principal is higher than interest:
Google Share - DOWNLOAD
a BORROW SMART CONCEPT
Interest Rates Drive Sentiment
Consumers think logically, but they act emotionally.
Jerome Powell's Dovish Pivot: The Market's Favorite Current Meme Story ❤️📉🔥
Imagine you’re running the biggest money printer in the world.
For months, you’ve been preaching “higher for longer.” Inflation bad. Rates stay high. Tough love.
But then… something changes.
Suddenly, you start glancing at that sweet, sweet “Dovish Lean.” Maybe a rate cut. Maybe a liquidity boost. And the markets? Oh, they LOVE it.
That’s this meme.
🔹 Hawkish Lean = Higher rates, less liquidity, slower growth. (Tough, but needed.)
🔹 Dovish Lean = Lower rates, more liquidity, asset prices go 🚀.
🔹 Jerome Powell? Torn between keeping inflation in check and making sure the markets don’t throw a tantrum.
And here’s the truth: When Powell even hints at pivoting dovish, housing and mortgage markets start winking at him like they’re ready for a second date.
Prior Lesson? Don’t fight the Fed. But also, don’t marry the dovish pivot—because sometimes, they return to their exes. 😏
Critical Thinking Bonus - these are very difficult and unusual times, and learning to think critically is - well critical. This podcast looks at the book ‘On Tyranny’ by Timothy Snyder and the repeating cycles of how power gets concentrated…
LIABILITIES
What’s Happening?
rates still trickling down
house payments still on the high end
sentiment no bueno
income for lower 50% no bueno
overall household balance sheets are bueno
but spending is slowing in early-stage categories
home builders are less confident
how do Reverse Mortgages help with these fears?
global confidence is interesting, lot of fear but relatively less world financial drama
REAL ESTATE
What’s Happening?
some improvement from the prior week - YAY!
foreclosures picking up
uncertainty not encouraging to new home buyers
ASSETS
What’s Happening?
again more red, as portfolios feeling pressure
here’s the big picture chart of ‘pressure’ since the 1800’s - stonks go up
but right now we are at epic poor sentiment, that should change after this week
in reality we are sour, but not SOUR PATCH KIDS sour
all signs point to a potential recovery
it feels worse because more of our wealth is in the markets right now
last time we had this many stocks below 200,
we were forming a bottom, but we needed to make a lower low first!
Larry Williams says we are at a great spot to buy, buy, buy for rally into summer
another look at being oversold
this has it’s own wealth impact on spending
as does this, but more localized to DC for now
sentiment compounds - people feel things are getting worse
almost 1 in 2 hold equities now, so you have to own them to feel them go up and down
we are in the late stages either way
cool look at the top players and how they have changed every 5 years
lighter trucks means less good are being shipped around…
ON BEING HUMAN
What’s Worth Sharing?
just reread this book, still one of my all-time favorites:
Listen to it here: https://open.spotify.com/episode/6dpap1N3JqKRIbQ4sEhkO8?si=a1ac712d9b23459a
DOPAMEMES
And Other Happy Moments…
Caption This: __________________
Ciro Russia - 12 Seasons
"Spend a handful of hours a day going fast. Crush a gym session. Do deep work on a project you care about. Spend the rest of the day going slow. Take walks. Read books. Get a long dinner with friends. Either way, avoid the anxious middle where you never truly relax or truly move forward."
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