PG&E Employees: Navigating Retirement Amid Rising Mortgage Rates

For PG&E employees approaching Retirement, rising Treasury yields and broader economic conditions drive mortgage rates - something to consider when making Retirement savings and housing decisions - says Michael Corgiat, a representative of the Retirement Group, a division of Wealth Enhancement Group.

As PG&E employees approach Retirement, understanding how inflation, Treasury yields and mortgage rates affect long-term Retirement planning is critical, says Brent Wolf, of the Retirement Group, a division of Wealth Enhancement Group.

In this article we will discuss:

1. The effect of rising mortgage rates despite Federal Reserve actions.

2. What Treasury yields affect mortgage rates and borrowing costs.

3. Inflation and economic policies affect retirement planning for PG&E employees.

But even as the Federal Reserve eased monetary conditions by cutting its benchmark rate by a quarter-point after a substantial half-point decrease in September, mortgage rates have shifted in the opposite direction in recent months. The 30-year fixed mortgage average jumped more than half a point to 6.79%, Freddie Mac reported. This upward trend is likely to continue, helped by rising 10-year Treasury yields - which affects financial planning for PG&E employees.

That situation demonstrates an important economic principle: mortgage interest rates aren't directly controlled by Federal Reserve decisions but driven heavily by Treasury yield movements. All these fluctuations are related to broad economic indicators which are pointing to solid growth now. That means Treasury yields and mortgage rates remain high—a divergence from the Fed's goal of lowering borrowing costs in housing and automotive - an area PG&E employees may want to monitor closely.

And the election of President Donald Trump has complicated market expectations. Anticipated Trump tax cuts that would increase the federal deficit also have pushed up borrowing interest rates. The interaction of monetary policy and economic outlook demonstrates the complex dynamics that shape borrowing costs that are relevant to retirement planning in the PG&E workforce.

For those at PG&E planning to retire, knowing how inflation affects fixed investments like Treasury bonds is critical. As inflation expectations rise, Treasury yields rise, which can raise mortgage rates. This affects retirees considering refinancing or home expansions. One 2023 Federal Reserve report said retirees are especially vulnerable to these economic shifts because fixed incomes may reduce purchasing power during inflationary periods.

Imagine the economy as a big ship on open water whose captain is the Federal Reserve who adjusts interest rates to manage conditions. But the course is shaped more by the captain's actions - it's determined by winds and currents, as measured here by Treasury yields and economic expectations. Though the captain slows to make the journey smoother, strong winds such as higher Treasury yields driven by growth forecasts and fiscal policies can whipsaw mortgage rates. This creates additional turbulence for passengers nearing their destination - like PG&E employees nearing retirement.

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Sources:

1. Giovanetti, Erika. 'The Fed Cut Rates. Why Are Mortgage Rates Higher?'  U.S. News & World Report , 18 Dec. 2024,  https://money.usnews.com/loans/mortgages/articles/the-fed-has-been-cutting-rates-why-are-mortgage-rates-higher .

2. Karl, Sabrina. 'Here's What Markets Now Predict for 2025 Fed Rate Cuts—And What It Could Mean for Mortgage Rates.'  Investopedia , 26 Feb. 2025,  https://www.investopedia.com/heres-what-markets-now-predict-for-2025-fed-rate-cuts-and-what-it-could-mean-for-mortgage-rates-11686953 .

3. Rosen, Andrew. 'How Will Mortgage Rates Impact The Real Estate Market And Your Retirement Accounts?'  Forbes , 5 May 2022,  https://www.forbes.com/sites/andrewrosen/2022/05/05/how-will-mortgage-rates-impact-the-real-estate-market-and-your-retirement-accounts .

4. Struthers, Mark. 'Navigating Mortgage Rates in Retirement Planning. Why Did Rates Go Up After The Fed Lowered Rates?'  Sona Wealth Advisors , 7 Nov. 2024,  https://www.sonawealthadvisors.com/the-economic-and-political-influence-on-mortgage-rates .

5. Michaud, Michael. 'Retiree Do's and Don'ts in a Rising-Rate Environment.'  Morningstar , 15 May 2018,  https://www.morningstar.com/retirement/retiree-dos-donts-rising-rate-environment .