The Federal Reserve raised interest rates to get inflation under control. One side effect is that taking out a mortgage to buy a home has gotten very expensive. That's especially a problem for some homeowners who managed to get a lower mortgage rate years ago. They have a sort of... champagne problem. Or, "golden handcuffs" as it's called. These homeowners may find they are "locked in" to their current home. In order to move to a new home, they have to take out a new mortgage at a much higher rate. It is one of the many problems plaguing the housing market right now. The Fed is expected to start cutting rates next week. Will the golden handcuff mess finally start to unlock? And what does it mean for people looking to buy their first home? On today's episode: We go deep into the golden handcuff problem and why it matters for everyone (including non-homeowners). We have FOMO about a big economic symposium in Jackson Hole, Wyoming. And we contemplate how to pronounce one of the most important interest rates in the economy: The IORB. This episode was hosted by Kenny Malone and Alexi Horowitz-Ghazi. It was produced by Sean Saldana. It was edited by Jess Jiang and fact-checked by Sierra Juarez. Engineering by Cena Loffredo. Alex Goldmark is Planet Money's executive producer. Help support Planet Money and hear our bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney. Learn more about sponsor message choices: podcastchoices.com/adchoices NPR Privacy Policy
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We are mere days away from a big fed announcement.
By all accounts, Jerome Powell, chairman of the Federal Reserve, is expected to cut interest rates next week.
And people expect that because he's basically been saying this is gonna happen for months.
Yeah.
I mean, albeit in these very fed speaky ways, you know, like this.
It will likely be appropriate to begin dialing back policy restraint at some point this year.
Translation rate cuts are coming soon, possibly, yeah.
Here's another one.
If the economy evolves broadly, as we expect, most FOMC participants see it as likely to be appropriate to begin lowering the policy rate at some point this year.
Yeah.
You know, lots of people have been watching that and hearing this stuff and interpreting it as interest rates are going to drop soon.
You know, of course, fancy financial types are watching this, but.