Latest / Real Investor Radio Podcast / Mini Breakdown | Trump’s $200B Mortgage Market Proposal
Transcript
- Craig Fuhr (00:00) Hey everybody, welcome back. Hey, it's Jack and I coming at you. We decided in 2026 that we're going to try some some new stuff. We had a lot of great response on our short form content where we just pick a subject and dive in. And so we're to be doing a lot more of that in 2026. Today we're kicking it off with just some stuff that's topical in the news. Jack, they say sometimes nothing. News doesn't happen in weeks and then in weeks like years happen in a week. don't know what the, I'll look up the quotation for the next one. But last week was quite a news week, Jack. You were out of the country and I immediately got this thing that came across my feed that Trump is going to try to infuse $200 billion into mortgage-backed securities in an attempt to help bring interest rates down. And I think both of us are cynical in the same way. Sometimes, Jack, that we see this as like, hey, it's an 80-20 thing. What American is going to say? No, thank you. Don't lower the mortgage rates when, in fact, nobody really knows what happens on the reverse side. Like, what are the repercussions of it? And what happens when that $200 billion runs out to mortgage rates at that point? Love to get your thoughts on it. It's very rare to see a president come out and say such things. And so what's your take? Jack BeVier (01:26) Yeah, I mean, I was expecting this to be kind of a little bit of a boring spring housing market. know, rates are high. Concerns about a consumer recession. So I was thinking this is going to be a bit of a lackluster, a bit of a lackluster spring market. And then Trump comes out and says, you know, puts a material amount of nuclear liquidity into the market here. It's a two hundred billion dollars, depending on kind of who you're listening to. I think that the rough estimates are that could move the mortgage market or will move the mortgage market, the agency mortgage market by call 25 to 50 basis points for 60 to 90 days. If you come in with $200 billion to spend, you're going to be the high bidder on mortgages over everybody else who used to be buying those mortgages. And that's going to move mortgage rates down. You pay more for the mortgages, rates go down. And but you're going to spend that $200 billion. And at the end of that $200 billion, the market goes back to what it was prior to when you got there. And so I think it is interesting, though, we're going to see I think it's very likely that we see a 25 to 50 basis point decrease in mortgage rates for a 60 to 90 day period come February, March, April, maybe that that trails into May. And I think that it's really, I think there's a bunch of interesting implications there though, particularly for if you're a home buyer and you're thinking about buying, this is literally a subsidized mortgage rate, right? Like you're gonna get a 25 to 50 basis point bump in this 90 day period and then it's gone and it ain't coming back. if you're, think as a result, I think there's gonna be a lot of home buyers who it's gonna pull forward demand into this 90. Craig Fuhr (03:09) Yeah. Jack BeVier (03:09) period and you're going to have home buyers out there hunting for what's available that and whatever is available during that 90 day period is going to get a lot of it a lot of excitement a lot of interest. So Craig Fuhr (03:21) So do you remember Jack, do you remember back in like 2010, 11, you you turn on the news every single night, all the news is telling you that nobody's buying houses, that, you it's dead. But here you and I are, I'm down in like, you know, better parts of Baltimore and in better parts of just outside of DC. And if we put a great product out on the market, it would sell in less than 30 days because... These first time home buyers were getting that $15,000 Obama credit. And dude, like they loved it. And I think that's what you're kind of saying about this 200 billion. Like the overall market last year for MBS was 1.89 trillion. So 200 billion is a small fraction of that that's only gonna go so far. And if it's 25 to 50 bips in the 90 days that you're putting a house on the market, by the way. Whether you're a home seller, a home buyer, or a flipper who's trying to put your house out on the market sometime early spring, you better price it right because that might be your best opportunity for the rest of the year. Jack BeVier (04:25) thousand percent, right? I think it's going to pull forward the demand just like that $15,000 tax credit did back in 2010. And that 90 day period is going to be the time to get your house off the market, right? Like do not be the guy who's got a house who's got a house still on the market when that mortgage money has been spent by the agencies because there's going to be a back end to that. And no one, no home buyer wants to be the first guy to get the mortgages at 50 basis points higher than what everyone did for the last 90 days. There's gonna be a trough on the back end of this. And so you're either selling in this 90 day period or you've got a rental property for the next six months plus. Craig Fuhr (05:08) So I got to, so the prediction is, let's say it's February, March, we see that the 30 year mortgages have dropped that 25 to 50 bits that we're suggesting might happen. And I'm a flipper Jack. And I put great stuff on the market. Like, you know, like my houses are beautiful and I'm pricing at the top, baby. I'm going top of the market, Jack. Tell me why this may not be the best scenario. This is not 2021, it's not 2022. Like, you cannot use that philosophy going into 2026. Jack BeVier (05:44) You know what? I'm going to say price it at the top of the market because you may actually have a multiple offer situation because there's so much, there's so much gets pulled forward, but you're dropping, you better be, you better drop that price every week. You better not miss that market. like, yeah, go for it. See if you get a, know, see if you get a multiple offer situation, but if you don't drop that price after a week, drop that price after a week, drop that price after a week and find out where the market's going to be. Cause if it, cause if you can't find the market in that 90 day period, Craig Fuhr (05:51) Demand. Jack BeVier (06:14) You're just wrong, right? Like, you you just missed market and there's a... Craig Fuhr (06:16) Yeah. and people start to look at your house like something must be wrong with it. All right. Well, so love to get your thoughts on that. What's going to be the net effect of the infusion of money going into MBS from the government? Frankly, it's just more debt that we're spending, you know, that we're just putting off to kick in the can down the road. And yeah, give us your thoughts. Love to hear from Jack BeVier (06:21) Yeah, 100%. ⁓ Yeah, I wanted to make, I was also thinking like the implications like how is this going to play out in the rest of the market, right? Because basically, Fannie and Freddie are showing up, which they're not participants in the mortgage market right now, you know, not meaningful ones. So they're going to show up with $200 billion burning a hole in their pocket. They're going to go overpay, right, for all the agency mortgages that are out there. And that's going to push rates down. Well, everybody else who was buying, who was gonna, who had money to buy that $200 billion of agency mortgages, they're gonna what? They're gonna go to Australia for 90 days? No, like they're gonna come to the work, they're gonna come to Park Avenue in the morning and their job is to deploy capital, like that is why they exist. But the thing is, they're just gonna look at those agency mortgages and say, they're too expensive, right? Given the risk profile of these loans, don't like buying, I liked buying them at six and a quarter, I don't like buying them at five, seven, five. And so they're gonna say, well, what's my next best? next best option. Because my mandate is to play capital into American mortgages. And I think that the non QM products may be the unintended beneficiary here, because I think what is gonna still what Fannie and Freddie aren't gonna buy are the non QM loans. But the purely private sector mortgage players that aren't able to buy those agency loans are gonna look at non QM and say, Hey, that's adjacent. And I'm getting it's a little bit more risk, but it's also a little bit better return. And I think the money that that $200 billion of of purely private capital that wants to deploy into mortgages will get pigeonholed into competing with the other non QM buyers. So there's going to be some new money in that market to from from the adjacent market from the adjacent agent. Craig Fuhr (08:26) For those who haven't been long time listeners of Real Investor Radio, NonQM, one of the largest segments of NonQM is DSCR mortgages for real estate investors, which obviously Dominion Financial Services does daily and has for years now. But let's speak to that quickly, Jack, that that is frankly a a bucket that has been getting a little tighter over the last few months. You know, we see the voluminous guidelines that Jack, that all of our note buyers have, we're starting to see those guidelines get even a little bit more tighter. And so let's say that the adjacent play for all of this capital is non QMDSCR. Does that mean then that we'll see a loosening of the bucket or is it going to be the same sort of like tighter guidelines? But hey, there's just a lot more money being thrown at Jack BeVier (09:19) I think that you're going to see more money. I think, I don't think there's going to be a relaxation of guidelines. I think that you're going to see tighter bids for the middle of the box, right? These are, these are, this is money that liked agency mortgages. It'll come into non QM, but it's not going to want to come into the edges of the box. It's going to want to come right into the middle of the box. So I think that you're down the middle 1.2 plus DSCR high FICO, you know, 200 to $500,000 ARV property. Craig Fuhr (09:28) Yeah. Jack BeVier (09:46) The pricing in that segment, I'm actually thinking that it's going to tighten, that there's the probability that it's going to tighten 10, 20, 30 basis points as a result of that new money coming into that segment. So that's what I'm expecting there. Not wider guidelines, but tighter pricing for the middle of the box. Craig Fuhr (10:04) Dude, it's like you're reading my mind. I couldn't agree more with you on that. And I think the lender jack that provides a, and I'm not trying to sell here, but like, well, maybe I am, but the lender that works that box jack in a way that they can close it in 10 days. If you want to close it in 10 days, here's your pricing for 10. You want to close it in 30, here's your pricing for 30. Cause frankly, I'm going to be that guy that's going to beat everybody. And if you need it done fast, I'll be that guy for you. If you don't, then I'll be 30 days. like I think the guy who figures that out is the one who just hits hits constant. I don't think you're going to hit like these aren't going to be grand slams, but you're going to be working with better lenders that are straight down the middle who just need to get shit done fast. And like, and the person who figures that out and caters to that is the one who really wins in 2026. Jack BeVier (11:01) thousand percent. Craig Fuhr (11:02) Yep. All right, that's it for this one. See you on the next one.