Jayson Hardie – Managing Partner – (636) 256-5712
Hangovers are a puzzling experience. You can call them penance for overindulgence, or nature’s way of forcing you to slow down when you’ve pushed things too far out of balance.
If you’ve never had a hangover, chances are… we probably haven’t met. A former life in the nightclub industry—oddly enough—turned out to be excellent training for a career in mortgages. Unfortunately, it also gave me far too much experience in hangover management.
As a former pro at hangover recovery, I’m very familiar with the idea of “hair of the dog”—the belief that if you can just get another drink down, you’ll feel better. You might… temporarily. But all you’re really doing is restarting the cycle. With age comes wisdom, and while I no longer test that theory personally, I’ve learned to recognize it when it shows up in financial markets.
The Party
The mortgage industry experienced a once-in-a-generation boom in 2020-2021. In response to COVID shutdowns and the sudden risk of a frozen economy, the Federal Reserve stepped in aggressively to keep money flowing. Through a policy known as quantitative easing (QE), the Fed began buying massive amounts of U.S. Treasuries and mortgage-backed securities.
In simple terms, the Fed became the biggest buyer in the bond market, driving prices up and interest rates down. When mortgage-backed securities rise in value, lenders can offer cheaper loans because they know there’s a guaranteed buyer on the other end. The result was historically low mortgage rates, with some borrowers locking in loans near 2.5%.
The goal wasn’t to supercharge the housing market; it was to prevent a financial collapse. The housing boom that followed was a side effect of emergency-level policy, not a naturally occurring market trend.
It was a financial party of epic proportions. A two-year celebration sponsored by the largest financial entity on Earth: the U.S. government. And like all parties of that scale, it ended abruptly in January 2022.
The Hangover
What followed was inevitable. When money is made artificially cheap for an extended period of time, demand surges faster than supply can respond. Trillions of dollars injected into the economy didn’t just lower mortgage rates—it pushed up prices everywhere. Inflation surged, forcing the Federal Reserve to reverse course and raise interest rates at the fastest pace in decades.
As rates spiked, affordability collapsed. Monthly payments rose dramatically, even as home prices remained elevated from the prior boom. Buyers who could easily qualify in 2021 suddenly found themselves priced out, while sellers hesitated to move because they were locked into ultra-low rates. The result was a housing market stuck in place, spending the next four years nursing one of the longest hangovers in modern history.
This wasn’t a failure of the housing market. It was the market doing what markets eventually do—correcting excess, restoring balance, and forcing artificially created conditions back toward reality.
The “Hair of the Dog”
Now, in January 2026, the government has introduced what I’d call a financial “hair of the dog.” Amid ongoing tension with the Federal Reserve, President Trump announced that Fannie Mae and Freddie Mac would step in to purchase mortgage-backed securities (MBS) from the open market.
Between the two agencies, up to $200 billion has been authorized for MBS purchases, with the stated goal of lowering mortgage rates.
The issue? This isn’t a mild remedy. It’s the beginning of another bender.
Here’s what we’re likely to see:
- Lower Mortgage Rates — Temporarily
Rates may dip slightly as demand for mortgage bonds increases, but without broader policy changes, the relief is likely short-lived. - Increased Liquidity for Lenders
Banks may have a bit more capital to lend, but underwriting standards and access to credit probably won’t change much for most buyers. - Artificial Pressure on Home Prices
Lower rates can bring more buyers back into the market, and with limited inventory, that demand may simply push prices higher again. - A Limited Overall Impact
The mortgage bond market is enormous. While $200 billion sounds massive, it’s small relative to the overall system and unlikely to create lasting change.
For everyday homebuyers, this plan may offer a small, temporary bit of relief, but it isn’t a game-changer. Mortgage payments might improve slightly, but affordability challenges remain. And if history is any guide, policies designed to force better conditions often delay the real adjustment rather than fix it.
Final Thoughts
We had the party.
We endured the hangover.
The market has been slowly working toward organic balance. It doesn’t need another artificial boost, especially one that risks setting the stage for yet another painful correction. Because history shows us this clearly: another party almost always leads to another hangover.
If you’re thinking about buying a home, it’s important to remember that waiting for the “perfect” rate environment doesn’t always work in your favor. Sometimes, buying when rates are higher, but competition is lower, puts you in a stronger position than waiting for rates to fall and bidding wars to return.
You can always refinance your mortgage when rates come down. What you can’t do is get back the money you overpay when prices are driven up by artificially cheap money. Just like with a hangover, the solution isn’t always another drink. It’s letting the cycle run its course and making smarter decisions along the way.