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Speaker: [00:00:00] Welcome back to the What's Your 1 More podcast. I'm your host, Quinton Harris. You're dialed in for episode 261. Yes. [00:00:05] Government still shut down. We're getting limited data that comes in because of that, but we do have some interesting facts [00:00:10] that are coming out of the Mortgage Bankers Association conference that just took place and lots of it has to do with the [00:00:15] mortgage data and what the market holds for 2026.
That and more in this episode of [00:00:20] What's Your 1 More. [00:00:25]
, so welcome back to the show. So, coming out of the NBA [00:00:30] conference and for those listening that may not be aware of that Mortgage Banker Association conference, they usually do this at the end of the [00:00:35] year as a production
Meaning like, Hey, what does this look like? Trends you're seeing, [00:00:40] concerns, addresses, new technology. I'll touch on that here in a minute, but, you know, there was a. [00:00:45] Resounding enthusiasm coming out of this. And I think the resounding [00:00:50] enthusiasm was in regards to the data that came out recently in the mortgages.
Now with the [00:00:55] government being shut down, we lose a little bit of data sets, but this in particular is available publicly. [00:01:00] As we kind of go through it here, there's a couple things to kind of talk about. You know, I get these data sets and it cracks me up [00:01:05] because as I go through 'em, there's like this button that says AI summary.
And you [00:01:10] know, I'm gonna go on a rant here for just a second, but. You know, the thing about AI that drives me nuts is, [00:01:15] at the heart of it, it stands for artificial intelligence. Like artificial being [00:01:20] fake, being not real, not original. Like I, I just blew my mind like, oh, do you want fake [00:01:25] intelligence?
Do you want a not real intelligence? choose. Choose this. And then the whole [00:01:30] chat GPT thing, like, I, I love it when people think they've discovered like this newfound, you know, [00:01:35] Bitcoin or gold when they're like, oh, let me be your coach. I have a chat GPT coaching [00:01:40] platform. Just click on this.
And I'm like, really? Like, dude, anyone could get that script. And by the way, [00:01:45] the more you feed. Artificial intelligence, the more you're feeding your extinction, it's, you know, [00:01:50] it's the craziest they ever seen. It's like, oh, feed a system that wants to put you outta business. Keep pumping something to a fake [00:01:55] system that can put you out.
and I love it how people think they, you know the Columbus, you know of the [00:02:00] worlds, oh, Chat, GPT got AI summaries. Sorry, I went on a rant there. I kind of get. Lost in that [00:02:05] because I, it drives me nuts. Automation's a different story though. I did wanna say that. Automation, different story, right? [00:02:10] I think automating things that improve user experience and improve efficiencies of the individuals [00:02:15] doing the job.
Hey, that's great. Ai. Fake intelligence, man. Maybe we should call that [00:02:20] FI from now on, you know? Fi like fake intelligence, right? You could, you imagine if your kids had fake [00:02:25] intelligence, you'd be enthusiastic about that. Hey man, I'm going to school 'cause I'm going to be fake intelligence. I don't get me [00:02:30] wrong, people make money off of AI and I get it.
And it's the newest, latest, and greatest thing. it's going to fizzle [00:02:35] out. Studies show right now, most people don't even wanna do anything with AI from a consumer perspective. They'd rather have person to [00:02:40] person. It's a matter of time that phases out automation's. Again, that is something that's real.
Automation [00:02:45] is real because automation improves efficiencies. It doesn't eliminate jobs. It improves and [00:02:50] strengthens the job force that's out there. AI ruins it probably 'cause it's fake [00:02:55] intelligence. As I continue to say, I can go on these rants for a long time here. My producer uses AI and I'm, he's laughing at me over [00:03:00] here.
But it's fake intelligence, right? I mean, anything it is just fake. Artificial [00:03:05] substitute of real fake intelligence. Okay, I'll stop with this. So let's get into the, mortgage data here, [00:03:10] not using an AI summary. So here's what I love about this. There's some recent surprises [00:03:15] in this as to why this data is going to be bigger and better as far as production in 26 [00:03:20] compared to 25, meaning more volume in the form of more loan transactions, more buyers to the market, [00:03:25] and more people.
Maybe selling their home. Disposing of their home. That's right. That's the word. Disposing. [00:03:30] I'll explain that here in a minute. And then maybe investors not getting the,the return on investment as [00:03:35] expected on the monthly payment. So let's talk a little bit about that. How could that be happening?
Well, I think [00:03:40] the gap between expensive and cheap mortgages has grown. Deeper than it has been [00:03:45] over the last three years. Now we've talked about the lock-in effect. I'll touch on that briefly again. I continue to feel like I'm giving a, [00:03:50] a weekly update on that, but it's changing and the landscape's changing significantly.
I mentioned that in the last [00:03:55] show. I'm gonna show you the data that just came out on that. We kind of had an indication that was coming, a [00:04:00] foreshadow, if you may, and it popped up in the datasets here. But this is interesting. So this gap, this wedge, I'm gonna [00:04:05] put a graph on our YouTube channel. If you're listening on Apple or Spotify, we appreciate that.
Jump on this YouTube [00:04:10] channel at what's your, one more with number one, subscribe. You know, hit the like button there. Comments are always [00:04:15] welcomed and great, you know, we try to review 'em the best we can. but on here, here's something that's interesting. So when I [00:04:20] look at this, there is nearly 20% of all mortgages now in the United States have greater [00:04:25] than a 6% interest rate.
Now, we weren't just a year ago before that was less than [00:04:30] 10%, now we're at 20%. So what does that tell us? Right? Well, it does tell us that still the bulk of the [00:04:35] mortgages in the United States are below the, that 5% and below, right. about [00:04:40] 52% of that. But the other 48% are now above that and 20% [00:04:45] of that being higher than six.
And I think after a three year of like high interest rates in the [00:04:50] United States, this mortgage landscape's changed. And the implications of, you know, how we should look at the. [00:04:55] Housing market in 26 have changed because of that as well. And here's some interesting developments under the way. [00:05:00] So expensive mortgage holders behave differently than lower rate mortgage holders.
What do I mean by [00:05:05] that? Well, if you're an expensive rate mortgage holder, let's say six and above, right? I like [00:05:10] expensive. Let's say six and a half above, right? Because I still think, I think low six is gets the job done right now. But [00:05:15] let's say six and a half and above is defined as expensive for the duration of this podcast, right?
[00:05:20] For the purpose of this show. Those individuals are less likely to be a hoarder of a [00:05:25] property, meaning they're not holding onto that two and a half, 2, 7, 5 saying, I'm not gonna let it go unless I get this [00:05:30] exuberant price point that I want. they're willing to say, oh man, I'll trade up. I got a six and a half.
I'll go get [00:05:35] a six and a quarter. 'cause we're seeing these rates now come down to that level where these six and a halfs and. [00:05:40] Above as we like to call in the money pipeline, right? There's some industry lingo for you in the money pipeline that's [00:05:45] behind the scenes. We talk about that as a, uh, secondary market.
That's something we say, Ooh, these deals can refinance at any [00:05:50] moment. They are technically, quote unquote, in the money. So these in the money pipeline deals, they are. [00:05:55] They are literally saying, I can trade up or trade down with a six and a half and get a lower [00:06:00] rate. I can refinance, keep the home that I got, or I could list this property, sell it, and go get another property.
[00:06:05] We're seeing that happen. they're less likely to hold onto that. The other thing we see with that is investors that [00:06:10] may have got that rate. Because we know that investors are [00:06:15] targeted at a higher rate because it's considered a more risky loan, right? It always has the [00:06:20] llpa attached to the loan level price adjustments from the agencies of Fannie and Freddie.
But we also [00:06:25] know about 18 to 24 months ago, Fannie and Freddie kind of looked down. On investors, right? And [00:06:30] second homes, because they said, we don't wanna be the mecca of where all these homes come. We don't wanna be known [00:06:35] as a machine that fuels people to have multiple homes. We are here for the American Dream.
We want [00:06:40] primary residences for the most part. So therefore, we're going to punish in the form of pricing. [00:06:45] Second. In investment properties. So then created this need in the private sector. [00:06:50] And that private sector is normally referred to as a non-qualified mortgage, non QM for those in the business is [00:06:55] what they call it.
And it kind of derived with these DSCR loans, right? And we know those are debt [00:07:00] service coverage loans. we hear those all the time on the internet and on TikTok and all the other social medias, people [00:07:05] are talking about DSCR loans and how to do it with just rent rolls and no income and bank statement loans [00:07:10] derived from that.
And the list goes on and on. Well, those have higher rates than [00:07:15] six and a half. Like those are way in the money rates. Right? Those, some of those are in the upper sevens, right? Well, now those [00:07:20] individuals are evaluating, is my payment cash flowing or can [00:07:25] I refinance and get a lower. Payment rate now with some more defined income than maybe just [00:07:30] these DSCR loans or the DSCR loans.
Here's something, those things are way down now in the form of [00:07:35] pricing because the mortgage market has changed accordingly, being way down in rate, so they could refinance. There's [00:07:40] multiple options there, but we're also seeing those investors saying, eh, rents are deteriorating in some [00:07:45] markets. more importantly, maybe I overshot what I thought I could get a rent payment on this or that [00:07:50] I'm have some vacancy issues.
So they're selling the property, right? So we're seeing when they sell the property, another [00:07:55] transaction taking place. We're starting to see implications of that. And then the final one is this. I talk about this, I [00:08:00] know I'm beating the drum here, but the labor market is not what it was two years [00:08:05] ago. I mean, you could argue it's not what it was six months ago.
I, you know, we could argue maybe it was not what it was [00:08:10] 90 days ago, but. It's slowly deteriorating, it's not getting better. And we've seen the [00:08:15] signs of that. And typically this is also showing up in the mortgage market because if people start to lose their [00:08:20] jobs, they're gonna let their house go or they're going to downsize.
And so we're [00:08:25] starting to see that happen as well. And those three components are, you know, really [00:08:30] the difference we're seeing in 26 in comparison to what we saw in 21, 22, 23, and 24, and [00:08:35] even parts of 25.
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Speaker: The second thing that's interesting in [00:09:35] this that we're starting to see is that. just in general as a public, we're paying off our mortgages [00:09:40] very quickly.
And again, I go back to this difference of the haves and the have nots, in the form [00:09:45] of low interest rates and high interest rates. That's what I mean. I don't mean like income, I'm saying like the haves of low [00:09:50] interest rates and the have nots of low interest rates, right? There's a vast difference, and that difference is [00:09:55] also showing up in the form of how fast people are paying off their mortgages.
And if you look at the current loan to value for [00:10:00] outstanding mortgages in the United States, listen to this, 44%. [00:10:05] That means half. I just wanna back up on that. That is such a, just a [00:10:10] staggering stat. Like in my 20 plus years of being in the industry, and I could probably go back [00:10:15] 50 years, you know, you're not going to see this, that we are building equity at a [00:10:20] quicker rate.
Now you could argue, you could say, Hey, Quinton. Well, you've been talking about it for a while that [00:10:25] the prices are continuing to go up. They're not coming down. That's right. That's adding to it. But the other [00:10:30] component of this is that people are paying their mortgages down faster than they have before.[00:10:35]
A component of that would be 52% that I talked about earlier. They have those interest rates below 5%. [00:10:40] Well, if. they're paying down the interest quicker, thus attacking the principal faster. With those lower [00:10:45] interest rates that can happen, you can add a little extra to the payment. but what's happened is that it's creating a huge pile of [00:10:50] wealth here.
When we take a look at it, that means that 44% low, basically average loan [00:10:55] to value, that means there's on average. If you think about this, 55% [00:11:00] plus of equity in every home in America on average. Now, I know those different and different areas and everybody has their [00:11:05] own things, but this is just mind boggling me.
And remember, we talk about this, there's [00:11:10] 40% of homes in America. I'm talking about homes now, not mortgages. They don't even have a mortgage, [00:11:15] so that is incredible. That's an all time high as well. So we have a lot of equity here. This [00:11:20] adds to the, how can I say it? This adds to the notion of why we're not going to have this real [00:11:25] estate doom and gloom collapse.
This just further strengthens those podcasts we [00:11:30] did about all the people online that sound like idiots when they're talking about housing crash. And, [00:11:35] you know, for 13 years they've been preaching it for 13 years. They've been consistently wrong. This also adds to the [00:11:40] fact that like, if you're in that younger.
Gen X, gen Z, you know, millennial [00:11:45] generation, like, and you're sitting on the sidelines going, Hey, I'm waiting for this crash. I'm down. That's [00:11:50] this equity. Position that I'm talking about, this graph that we have on [00:11:55] our YouTube channel. What's your one more With the number one, you'll quickly see that the people have room [00:12:00] to take hits.
If there was a hit, let's say we had a 20% hit on average, [00:12:05] that would put the current loan to value in America at 64%, we had a 20% equity drop. We'd still be at [00:12:10] 64% loan to value. So. People aren't underwater. These housing, crashes that people wanna see [00:12:15] happen, you have to be underwater for the crash to happen.
You can't have ac equity for the crash to happen. And this [00:12:20] essentially reiterates what we've been saying for years on this show. It's, it's [00:12:25] absolutely mind boggling and equity games just aren't happening in the housing market. Look at the stock market all [00:12:30] time highs. Look at the crypto market all time highs.
It is a equity euphoria taking [00:12:35] place right now. and if you wanna see that, you can go to anyindex and take a look at that. But what's interesting is [00:12:40] index, I challenge you to take a look, look at that fear and greed index right now. I'll leave that for another show, but that's pretty interesting [00:12:45] considering that's at an all time high in one particular sector of that particular index there.
And then last but not [00:12:50] least, I told you I'd come back to this, but we kind of have a new perspective on the lock-in effect. [00:12:55] And I think let's back up to what the original perspective is. The original perspective on the [00:13:00] lock-in effect was that hey, all of these loans, all of these, new [00:13:05] mortgages, refinances, that were created during 2020 and 2021 got such a low rate, you know, somewhere between two [00:13:10] and 4%.
That how on earth are people going to shed those [00:13:15] rates? How are they gonna get rid of those? And go buy a new home. When they have this payment and [00:13:20] this rate, they're comfortably locked into that. It's gonna be a stagnant housing [00:13:25] market. And that did happen for some time. But like all things needs and wants start to take [00:13:30] effect, people grow outta their house.
you know, new household formations are created. Things happen. I [00:13:35] mean, divorces, the list goes on new births. I mean, you outgrow your house, you need more room. I [00:13:40] mean, lists, things happen, debt consolidation, it all happens. So swapping those interest [00:13:45] rates only took a matter of time and we did suggest that it would happen down the road.
I [00:13:50] think the thing that's eye-popping here is just how much has switched here. And what I mean for that [00:13:55] is swapping a 3% mortgage for a six and a half mortgage is a difference between, you know, thousands of [00:14:00] dollars. Right? But. People say, well, if I can save money. Because we're [00:14:05] all payment shoppers. At some point, if I can save money on a debt consolidation, swapping that rate's not so much [00:14:10] of an issue.
Right? Because you went from sitting around the dinner table talking about, oh, I got 2%. What'd you go? I got two and a [00:14:15] quarter. How'd you get two and a quarter I'd? Everybody wanted the lowest rate to. Now that's not really a topic of [00:14:20] conversation at the dinner table because. Knowing that you can get rid of that rate, even though you may not be the lowest rate [00:14:25] in the room, or you might not be the lowest rate on the block, you're saving thousands of dollars a month.
And I think that's the real win there [00:14:30] that people are starting to take a look at. It took time for that to come in. And, you know, after three years, you know, the average [00:14:35] rate, on all outstanding mortgages has actually gone up in the United States from 3.82, 4.4. [00:14:40] And so we're seeing that rise start to happen because, well.
20% of all [00:14:45] mortgages are over 6% in America. That'll start to skew that number and make it move there. And I think the final thing [00:14:50] I'll leave you with is this. The ironic thing about the lock-in phenomenon, the ironic thing [00:14:55] is I think we all thought the cure, including myself. Was that hey, rates [00:15:00] have to come down for that unlock effect to take place.
And we even said things like, Hey, [00:15:05] the low five or upper fives is the new four or the new threes, right? The upper fives is the [00:15:10] new threes. And I think everybody, I wasn't just the only one. I can honestly point to thousands of other people that [00:15:15] felt the same way. But the ironic thing is this, I think what none of us really thought is that [00:15:20] higher is that the cure wasn't lower rates, the cure was higher rates.
And I think that sounds [00:15:25] crazy, but the cure is hard, right? Because the housing market kind of fell in this lull over the [00:15:30] last three years. But meanwhile, like the United States home ownership has been in incredible shape [00:15:35] equity positions. We just spoke about, you know, all time wealth at highs. So over time the [00:15:40] phenomenal slowly evened out and people said, well, you know, I've got.
Equity. I can trade it in. I can debt [00:15:45] consolidate. I can trade this equity to go buy another larger home. Even though the rate's higher, I can still keep the payment in [00:15:50] line with my down payment. All these things started to work themselves out, which implies home [00:15:55] sales growth in 2026. And I believe the final thing I'll leave with is they're anticipating they [00:16:00] be in the NBA is anticipating 15%.
Uptick in business in 2026 from [00:16:05] 2025. That's a resounding number because that number was adjusted from a single digit to a [00:16:10] pretty large double digit for 2026, and that's a big win for all of us in the business. [00:16:15] It's also the sign of the consumer starting to come back from the pent up demand, and we talk about that all the time [00:16:20] here.
I was sitting down with a group of agents, it wasn't maybe two weeks ago, and we were talking about [00:16:25] all of new, the new listings coming to market, right? And the ironic thing about that, [00:16:30] that I think was missed in the room wasn't the fact that new listings were coming to the market and that [00:16:35] it could be a win, could be a negative thing, depending on how you look at it, is that every person that lists their [00:16:40] home.
Traditionally becomes a new buyer, and the person listing that [00:16:45] home is not going to list that home without further approval or knowledge that they can go [00:16:50] buy another home, and that they have the bandwidth to do it, and that they're quote unquote pre-approved. [00:16:55] That's your pent up demand. That pent up demand.
All those new listings you see are new buyers [00:17:00] wanting to come to the market and there's your pent up demand and sign of it on the way. 2026 is showing signs [00:17:05] of a really large pent up demand and excitement in the market, and I'm pretty excited about it. 'cause I know what it [00:17:10] lends to for us in 2026.
So guys, if you like what you're hearing, please share this podcast. listen to us [00:17:15] on Apple. Listen to us on Spotify. Give us a couple reviews, five stars there if you can. But also if you wanna see these charts, go to [00:17:20] our YouTube channel. Watch's your one more with number one. Check those out charts are there and, they say picture's worth a thousand [00:17:25] words.
So guys, till the next episode, we'll see you at, What's Your 1 More?
Speaker 2: I got one more shot. I'm gonna [00:17:30] make it one more chance. [00:17:35] [00:17:40] [00:17:45] I'm.
