Mortgage 101 Podcast: Episode 28 - The K Economy Crunch: Why Most Americans Aren’t Doing GREAT

In Episode 28, hosts Manley Haines and Anthony Valentino use a Kellogg’s Corn Flakes theme to explore the K-shaped economy in October 2025, where asset owners thrive while renters struggle. They break down the K economy, highlighting how homeownership separates wealth builders from paycheck chasers, with homeowners gaining $27,000/year in equity vs. renters facing rising costs.

The episode covers market updates (30-year fixed at 6.22%, 10-year Treasury at 3.98%), the role of convexity in sticky rates, and actionable steps to join the upper K through intentional spending. A buzzword breakdown (Convexity, Sticky Rates, Yield Curve, Equity Cushion, K Economy) and a real-world win story of a teacher gaining $75,000 in equity and saving $260/month via refinancing underscore the power of asset ownership.

[00:00] Welcome to Mortgage 101: Episode 28

Manley: I’m Manley Haines, with Anthony Valentino, and this week’s episode isn’t just great—it’s GREAT! Well, not really, because the market’s soggy.

Anthony: We’re calling it “The K Economy Crunch: Why The Current Economy Got Corn Flaked and Most Americans Are Not Doing GREAT.”

Manley: We’ll break down the K economy—how two people on the same block live different realities based on owning assets or payments.

Anthony: Learn what defines the upper and lower K, why homeownership is the tipping point, and how to move upward. Plus, rate updates, convexity, buzzwords with Ryan, and a Tony the Tiger knock-knock closer. Like, follow, subscribe!

[01:31] The Soggy Economy

Anthony: Ever pour cereal expecting a strong start, only to find the milk’s bad? That’s today’s economy—headlines say it’s great, but it doesn’t smell right.

Manley: Wall Street’s eating seconds, while Main Street’s scraping crumbs. Unemployment’s low, stocks are up, inflation’s cooling to 2.8%, but most feel stuck.

Anthony: That’s the K economy: the upper half owns assets and rises; the lower half rents and slides. Housing is the fork in the road—wealth building vs. paycheck chasing.

Manley: Today, we’ll crack open why the K is widening and how to climb it without being rich. Comfort costs, but calculation pays.

[03:34] Market Update: Rates and Convexity

Manley: Let’s hit the numbers driving rates.

Anthony: In October 2025, 30-year fixed is at 6.22%, 10-year Treasury at 3.98%—both down. Inflation’s at 2.8%, but rates are sticky due to Fed hesitation, Washington’s budget mess, and the government shutdown.

Manley: When Congress stalls, investors stall. Mortgage-backed securities (MBS) flatten, yields hover, rates park.

Anthony: Convexity’s the culprit—when rates drop fast, investors fear early payoffs or refinances, back off MBS, and blunt the decline. Even with yields under 4%, mortgage rates don’t fully follow, like a cereal box promising more but delivering 70% air.

[05:51] The K Economy Divide

Anthony: The divide is asset havers vs. asset chasers. You don’t need to be rich—just intentional.

Manley: Americans spend $26,000/year on comfort: $2,500 on coffee, $18,000 eating out, $1,200 on streaming, $1,500 on premium Wi-Fi/AI. That’s $250,000 in 10 years—wealth lost to lattes.

Anthony: The K isn’t about income; it’s about behavior. Comfort drains, calculation compounds. Two neighbors, same job, same street: one builds equity, one builds debt chasing convenience.

Manley: Asset havers own homes, stocks, businesses; chasers lease phones, subscriptions, cars. Shift by renting rooms, reducing debt, repurposing spending—be intentionally uncomfortable now for freedom later.

[09:33] Five-Year Reality Check

Manley: The K is math vs. comfort. The upper leg compounds—leveraging assets. The lower leg consumes—swiping, streaming, waiting.

Anthony: Over five years, pandemics, inflation, layoffs, and shutdowns hit, but asset owners always came out ahead. Homeowners and investors thrived; those paralyzed by fear missed every chance, waiting for “perfect” timing.

Manley: Uncertainty rewards participation, not paralysis. You leave a cycle with stronger assets or heavier debt. Choose to own, not chase—$2,500 in savings, not Starbucks, starts the shift.

[12:13] Homeownership: The K’s Lever

Anthony: Homeownership isn’t just a roof—it’s a financial lever. Since 2019, home values rose 50% nationwide. Homeowners gained $27,000/year in equity last year alone.

Manley: Renters paid landlords, funding their vacations, with nothing to show. Homeowners’ net worth averages $400,000; renters’ just $10,000. That’s leverage and generational opportunity.

Anthony: Don’t time the market—participate. Waiting funds someone else’s asset. Use the renter’s struggle as fuel to act differently.

[14:56] Rate Tracker: 2025 Update

Anthony: Our 2025 prediction: rates at 5.8%-6.25% by December. January started at 6.65% (volatility, Fed delays), February 6.73%, March 6.81% (sticky CPI, climbing yields), April 6.74% (jobs cooldown), May 6.685% (easing inflation), June 6.64%, July 6.71% (MBS demand dip), August 6.69%, September 6.67% (investor caution), October 6.22% (yields at 3.98%, convexity muting drops).

Manley: Year-to-date average is 6.22%, hitting our prediction. One more Fed cut could push rates to 5.9%-6.1%. Rates are dropping—it’s when and how much.

[16:46] Buzzword Breakdown

Ryan: Producer Ryan’s in his Tony the Tiger t-shirt, decoding buzzwords after 4,500 boxes of Corn Flakes. Let’s crunch!

Convexity (Anthony)
The math behind rates bouncing when yields drop—investors protect returns, fearing fast liquidity, making rates soggy.

Sticky Rates (Manley)
Rates move slow, like honey, due to investor hesitation and uncertainty. The market’s not ready to commit.

Yield Curve (Anthony)
Connects short- and long-term Treasury rates. Inverted now, flashing caution, warning of economic tension.

Equity Cushion (Manley)
The gap between home value and mortgage balance—homeowners have 30%+ equity, a financial airbag.

K Economy (Anthony)
Two lanes: top invests, bottom consumes. Same data, different destinies—choose to own the bowl.

[19:28] Real-World Win

Manley: Two teachers rented side by side for eight years. One bought in 2021 for $340,000, now worth $415,000, gaining $75,000 in equity.

They refinanced from 7.1% to 6.4%, saving $260/month.

Anthony: The other renter faced a $400/month rent hike. Same paycheck, two outcomes: upper K owns assets, lower K chases them. Inflation boosts asset havers’ gains, while chasers face rising costs. Act now to break the cycle.

[21:41] Final Thoughts

Manley: The K economy mirrors your choices: chase comfort or chase math.

Anthony: The past five years prove markets change, but homeownership wins. You can’t control policy, but you can control participation.
Manley: Don’t let fear dictate—react with purpose to join the upper K. The K doesn’t decide your fate—you do.

[22:27] Knock-Knock Closer

Anthony: Knock, knock.

Manley: Anthony, no more knock-knock jokes!

Anthony: In my best Tony the Tiger voice—knock, knock!

Manley: Who’s there?

Anthony: Tony.

Manley: Tony who?

Anthony: Tony says the economy ain’t great, but owning your home is the breakfast of champions!

Manley: My cereal’s soggy, I’m out!

FAQ

What is the K economy?
A divide where asset owners (upper K) build wealth, and renters (lower K) chase comfort, facing rising costs with little gain.

Why are rates sticky at 6.22%?
Convexity and investor hesitation—fearing early payoffs, they back off MBS, muting rate drops despite 3.98% Treasury yields.

How does homeownership help?
It builds equity ($27,000/year on average) and leverage, with homeowners’ net worth at $400,000 vs. renters’ $10,000.



How to join the upper K?
Cut comfort spending ($26,000/year on coffee, dining, subscriptions), redirect to savings, rent rooms, or buy assets.