Why Your Mortgage Hit 6.81% This Week

A woman in Osaka opened her pension statement last week. For the first time since she was in her twenties, the number on the page meant something. Japan finally pays interest again. And that small fact is about to make your mortgage worse.

I can't stop thinking about this. The story nobody is telling you is sitting in plain sight. It's not the war. It's not oil. It's not even inflation. It's Japan.

Here's what worries me. For thirty years, Japan has been the quiet buyer of American debt. Their banks, their pension funds, their giant life insurance companies. They bought our bonds because their own country paid them nothing. Zero. Sometimes less than zero. So they shipped the money here.

Did you forget to download my Simple Options Trading for Beginners guide?

It's $29.97 on my website, but I set up a temporary backdoor link that gets you a free copy.

The smart move is to save a copy before the temp link expires.

Make sense?

Click here to download the $29.97 Simple Options Trading for Beginners report for free.

That money kept your mortgage rate low. You never knew it. I never knew it either. Nobody talked about it because it just worked. Tokyo grandmas were quietly funding starter homes in Tulsa.

Last week, Japan's 30-year bond cracked 4%. First time since 1999. The year that bond was born, it had never paid this much. Now it does.

I don't think most people realize what this means. Nippon Life and Dai-ichi Life are the giants. They sit on about $1.2 trillion in US Treasuries between them and their peers. That makes Japan the single biggest foreign holder of our debt. Bigger than China. Bigger than anyone.

They sold $29.6 billion of our bonds in the first three months of this year. Biggest dump since 2022. Monthly selling almost quadrupled between January and March. The exit is happening right now, while you read this.

A bond manager named Mark Dowding said it plain last week. New money from Japan will come home. Not to US corporate bonds. Not to US Treasuries. Home. To Tokyo.

I get it. This sounds like inside baseball. Bonds, yields, foreign buyers. But stay with me one more minute. Because this lands on your kitchen table.

When Japan stops buying our bonds, the price drops. When the price drops, the yield goes up. When the yield on the 10-year Treasury goes up, your mortgage rate goes up. Every time. No exceptions. That's the chain.

The 10-year is now at 4.67%. The 30-year Treasury just hit 5.12%. Highest since 2007. The average 30-year mortgage is sitting at 6.58% to 6.81%. Highest since last August.

Here is the number I keep coming back to. One point two trillion dollars. That's what Japan is sitting on. Even a sliver of that walking out the door reprices every loan in America. Your mortgage. Your kid's car loan. The home equity line you were going to tap for the kitchen.

Nobody knows exactly how fast they leave. Nobody knows the bottom. The Bank of Japan itself is figuring it out as they go. But the direction is clear. The silent buyer of American mortgages is walking out of the room. He's not slamming the door. He's just leaving.

And here's the part that bothers me. The headlines blame oil. They blame the Fed. They blame Washington. None of them mention Tokyo. Not one I've seen this week. The biggest force on your mortgage payment is a story nobody is writing.

I think about that Osaka woman. She did nothing wrong. She paid into her pension her whole life. Now her country finally pays her what she earned. Good for her. Honestly, good for her.

But the money that pays her is the money that used to buy a young couple's first house in Ohio. Same dollars. They can only be in one place. And they're going home.

The American family trying to buy a starter home this summer is now bidding against a Tokyo grandma. And right now, she's winning.

More on this tomorrow.

— Lauren
Editor, American Ledger