Updated 11/12/2025
I was hoping for interest rates to come down this year and so far they have but only a little. Conventional home loans are currently around 6%. I was hoping that rates would have come down to at least the mid- 5%’s but it seems we will have to wait till next year for that. I believe interest rates will go down by about 1/8 per quarter next year. If I were buying a home right now I would not pay points for a lower interest rate but buy now and wait till rates are down and then refinance. Hopefully I’m right. Click Here To See Current Interest Rates
Although not always parallel due to economic and political factors such as policy, booms and recessions, historical data shows a long-term relationship between rising national debt and higher interest rates. Studies from the Federal Reserve Bank show that each percentage point increase in the national debt to GDP ratio increases long-term interest rates by 2 to 4.5 basis points. A basis point is 1/100 of 1%. ln simpler, less gobbledygook language, without our gross domestic product changing, if our national debt goes up $3.7 trillion or 10%, interest rates would likely go up one 1/4 to 1/2 percent.
It’s my opinion, interest rates can go significantly lower, if the Federal Reserve Bank believes the federal government has stopped borrowing on a national level and is willing to pay down, at least a little bit, the national debt, to show we can and will do it – OR – the United States falls into another recession – OR – the most likely scenario, our GDP goes up due to manufacturers moving back to the United States. An additional advantage to this would be more jobs therefore more taxes collected to start whittling down that debt.
$37,000,000,000,000 (that’s trillion), that’s our national debt. To understand how big that number is: if every homeowner in the United States sold their home and gave 100% of the money to the government it would still not be enough to pay off the national debt. If every billionaire in the United States liquidated every penny they had and gave it to the government it would not be enough to pay off the national debt. If you earned a dollar every second ($3,600 an hour), 10 hours a day , seven days a week, it would take a month to earn one million dollars. It would take over 76 years to earn one billion dollars. It would take over 76,000 years to earn $1 trillion and over 2.8 million years to earn $37 trillion dollars. OR – If every household in the United States, approximately 130 million households, each gave $150 a week, we could pay the ongoing interest on that debt which happens to be around $1 trillion a year.
Click here to See Government Borrowing In Real Time. You won’t believe your eyes!
The United States currently collects about 4.9 trillion in federal taxes annually but spends approximately 6.8 trillion. That explains why our debt is growing at approximately 1.9 trillion per year. So why exactly would the Federal Reserve Bank, a privately controlled bank, lower the interest on money we’ve already borrowed except to entice us to borrow more than we are currently borrowing?
If you have any questions, feel free to call me. Alex Schauffert 707 332 8301
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