Nikki Foley:
Thinking about buying a home or wondering if you missed your window? Mortgage rates, Fed decisions, and new technology are all shifting the market fast. Today, we’re breaking down what’s really driving it and what it means for you.

I’m Nikki Foley, host of Paladin Financial Talk, and I’m joined by featured guest Jay Dacey of Jay Dacey Mortgage, a local mortgage broker and banker serving the Twin Cities of Minnesota.

Welcome, Jay.

Jay Dacey:
Thanks, Nikki.

Nikki Foley:
Jay has been in the mortgage industry for more than 20 years and has helped thousands of families navigate the lending process since 2003. He’s the founder and leader of the Jay Dacey Mortgage Team, serving clients across Minnesota and multiple states.

He’s also been nationally recognized and featured in major financial media outlets for his insights on lending, credit, and real estate trends. One thing I really appreciate about Jay is the holistic and educational approach he takes with clients — helping people understand not just the loan itself, but the long-term strategy and bigger picture.

We always love having him on the show.

Before we dive in, though, let’s clarify a few industry terms. You describe yourself as both a mortgage broker and a banker. What’s the difference?

Jay Dacey:
A mortgage broker doesn’t have their own capital. If you work with a broker, they shop multiple lenders on your behalf.

A mortgage banker, on the other hand, has their own capital. They fund your loan first and then typically sell it to another institution afterward.

The simplest difference is this:

A broker gets paid at closing through the title company.
A banker gets paid after the loan is sold.

That’s the major distinction.

Nikki Foley:
I appreciate how simply you explain that. Even working with you before, I don’t think I fully understood it until now.

Anything else listeners should know about your background?

Jay Dacey:
We’re licensed in Minnesota, North Dakota, Wisconsin, and Florida — especially helpful for Minnesota snowbirds.

Nikki Foley:
On this podcast, we talk a lot about retirement planning. Most people immediately think about 401(k)s, Social Security, or investments, but housing is one of the biggest — and often overlooked — pieces of financial planning.

Today, I really want to focus on what’s driving mortgage rates, how Federal Reserve decisions impact borrowing costs, and where rates may go over the next 12–24 months.

Sound good?

Jay Dacey:
Perfect. Let’s get into it.

Jay Dacey:
I’ll start with a quick story.

I was born in 1979, and my grandparents gave me a $500 CD at what was then TCF Bank. I was earning 12% interest as an infant.

Fast forward to 2001 when my brother and I bought our first house. He had just earned his MBA in real estate finance from UW–Madison. The lender offered us a 5-year ARM at 5.5% or a 30-year fixed at 7.5%.

At the time, I thought, “Why wouldn’t we take the lower ARM rate?” But my brother said:

“We’ll never be able to borrow this much money for this long at rates this low ever again.”

And that was at 7.5%.

So when people panic about 7–8% mortgage rates today, perspective matters. Mortgage rates are primarily driven by two things: inflation and unemployment. The Federal Reserve wants inflation around 2% and unemployment around 4%. If inflation rises too high, they raise rates. If unemployment rises too high, they lower rates to stimulate the economy.

Nikki Foley:
So what’s your crystal ball telling you?

Jay Dacey:
Crystal balls usually end up shattered.

But I think rates will probably remain fairly steady unless inflation spikes again.

We had inflation cooling down, but geopolitical issues — like tensions involving Iran and rising oil prices — pushed gas prices higher again. I was just driving back from Omaha and paid over $5 per gallon in Iowa. If oil prices settle down, inflation could ease again. If not, we may see higher rates ahead.

Nikki Foley:
What behaviors are you seeing from buyers and sellers right now?

Jay Dacey:
People got spoiled by 3% mortgage rates during 2020 and 2021. When rates climbed to 8%, many felt like the world was ending. But here’s the key: You can refinance your interest rate later. You cannot change what you paid for the house. The people who bought when rates were high have already refinanced into lower rates as markets improved. Historically, housing has been very stable. Home prices have gone up in 73 of the last 81 years and declined only seven times, most of which happened during the 2007–2008 housing crisis. Real estate has historically been a pretty safe place to be.

Nikki Foley:
That’s such an important perspective.

I think about our own situation. We bought our house in 2014 before having kids. Now our home doesn’t really fit our family anymore, but we’re sitting on a great interest rate, and our house is almost paid off.

So people are asking:

Do we move?
Do we stay?
Is inventory too limited?
Is it worth giving up our current rate?

There are very different lenses depending on whether someone is a first-time buyer, a long-time homeowner, or someone approaching retirement.

There’s also a lot happening with the Federal Reserve and possible leadership changes involving Kevin Warsh and Jerome Powell.

Can you explain in simple terms what this could mean?

Jay Dacey:
I’ll use a hockey analogy. Wayne Gretzky famously said: “Most players skate to where the puck is. I skate to where the puck is going to be.”

The challenge with the Fed is they often rely on rolling 12-month averages. They’re reacting to where inflation was, not where it’s going. I think someone like Kevin Warsh may react more quickly to current data. That could create more short-term volatility, but potentially better long-term outcomes because the Fed wouldn’t be so slow to respond.

Nikki Foley:
Housing shortages have been a huge issue. There’s legislation being discussed like the 21st Century Road to Housing Act. Does legislation like this really matter to the average person?

Jay Dacey:
I’m generally a believer in free markets, but this legislation aims to do a few things:

Reduce red tape

Streamline EPA requirements for smaller housing developments

Limit large institutional investors from buying additional homes

For example, companies owning more than 350 homes could face restrictions on future purchases.

Nikki Foley:
So who would really be impacted?

Jay Dacey:
Honestly, I don’t think most people will notice major effects. It’s probably more of a small shift than a dramatic one. A lot of these housing headlines sound huge, but whether they materially impact everyday buyers remains to be seen.

One thing we are seeing right now is homeowners sitting on significant equity. Because inflation has increased costs across the board, many families are using cash-out refinances or HELOCs to consolidate debt and improve cash flow. A cash-out refinance replaces your current mortgage with a new larger mortgage and uses equity to pay off other debts. A HELOC lets you keep your existing low mortgage rate and add a second mortgage using your home equity. So if you locked in a 3% mortgage rate years ago, you probably don’t want to replace it entirely.

Nikki Foley:
Is this something people should research themselves, or should they work with a professional?

Jay Dacey:
A lot of people are using ChatGPT and Reddit now before talking to a lender. We actually had to add “ChatGPT” and “Reddit” as referral sources in our CRM because so many clients are coming in after researching online. But honestly, I think the better route is to find a professional you trust and have a real conversation. People often build scenarios in their head that don’t even apply to their actual situation.

Nikki Foley:
AI feels less like a trend and more like a permanent structural shift. How are you seeing it impact your industry?

Jay Dacey:
I think AI will resemble the dot-com boom: Lots of excitement.  Lots of companies failing. And eventually a few long-term winners. In lending, we’re cautious because of data privacy concerns. I recently received a letter saying my data had been exposed in a breach involving ACT testing data from decades ago. That’s how long this information can live. Operationally, AI can help with repetitive tasks, but I’m cautious about sensitive client information being fed into large systems.

Nikki Foley:
A few years ago, I was introduced to avatar technology where you could essentially create an AI version of yourself to create content more efficiently. Not long after that conversation, I heard about someone having their avatar hijacked and used in ways they couldn’t control. That immediately made me think: What information are we putting out there? What happens if it gets out there? And how careful do we need to be moving forward?

Jay Dacey:
Exactly. There’s a great quote: “Don’t wait to buy real estate. Buy real estate and wait.”  Trying to perfectly time the market usually doesn’t work. If you’re considering buying, talk with professionals you trust, understand your options, and then let time work for you.

Nikki Foley:
One thing I continue to believe more and more is that we all need problem solvers around us. When Jeff and I started exploring commercial buildings, we realized quickly how valuable it was to work with someone who could simplify the process, identify roadblocks early, and offer realistic alternatives. That kind of clarity is invaluable. Jay, are there any resources you recommend people follow?

Jay Dacey:
I’m a big fan of Howard Marks and his newsletters. They’re available in written and audio formats, and he does a great job simplifying complex financial concepts.

Nikki Foley:
One tool I’ve also been using recently is NotebookLM. It can turn written content into audio summaries, which is great if you learn better by listening during commutes.

We’re also offering a download called “Should I Pay Off My Mortgage Early?” flowchart.

Jay, what’s your quick answer?

Jay Dacey:
It depends — but generally, no. One of the saddest things I saw early in my career was people nearing retirement with fully paid-off homes but almost nothing saved in retirement accounts because they prioritized paying off the mortgage first. The most financially successful people I’ve worked with usually max out retirement and investment accounts first, then decide whether extra money should go toward the mortgage. For most people, paying off the mortgage early is not the top financial priority.

Nikki Foley:
If anything you heard today resonated with you, both Jay and the team at Paladin Financial are happy to have a short, no-obligation conversation. Jay, what’s the best way for people to reach you?

Jay Dacey:
Phone: 651-315-7681
Website: www.jaydacey.com

You can also find me on LinkedIn and Instagram.

Nikki Foley:
You can also reach the team at Paladin Financial by visiting: PaladinFinancial.com

You can find us on YouTube, Facebook, Instagram, and LinkedIn.

And to download the “Should I Pay Off My Mortgage Early?” flowchart, visit our podcast page at: PaladinFinancialTalk.com

Thanks again for listening. Jay, thanks for joining us.

Jay Dacey:
Thanks for having me.