New Mortgage Monitor Report: Sellers “Pull Back”

Dave:
Property insurance is taking a bigger bite of the mortgage bill right now. Nearly one in every $10 paid by the average mortgage holder goes towards insurance and costs have climbed more than 11% in just the last year. What does that mean for affordability? Where are costs in the housing market rising fastest and how should buyers, sellers, and investors respond? Right now? I’m Dave Meyer, joined by Andy Walden from Ice Mortgage Technology, and today we’re diving into everything going on with the housing market. We’re going to unpack their latest mortgage monitor. We’ll cover insurance trends, price movements, inventory, loan performance, and more. This is on the market. Let’s get into it. Andy, welcome back to On the Market. Thanks for being here.

Andy:
You bet. Appreciate you having me again.

Dave:
Well, before we start, I just want to say thank you to you and your team. The mortgage monitor is such an awesome piece of content that you all put out. If you are a nerd like me, which I imagine you are because you listen to this show, you should really check this out. There’s so much good data in here and it’s very accessible. I think that’s the thing you all do really well is put into great visualizations that anyone can understand. You don’t need to dive through Excel. This is a really cool document, but for people who haven’t read it, we’re going to go deep into all the information that Andy and his team have put together. Let’s start, Andy, just with high level overview of the housing market. Every forecast forecaster, every company has a slightly different view of what’s happening with prices and volume in the country. What is the ice data telling you?

Andy:
It’s an interesting time in the housing market right now. So our latest home price index shows annual home price growth, kind of holding stable from July to August at about plus 1.1% year over year. We had been seeing this sharp deceleration out there in the market. August provided a little bit of flattening and in fact, when you look at it on a seasonally adjusted basis from July to August, we saw just a modest uptick. So it’s a very soft housing market right now, I think is kind of the way that I would bluntly put it. But you are seeing these little signs of another inflection out there and a couple of those are you’ve started to see sellers take a step back from the market. You’ve seen that inventory building that had been going on for the better part of the last year. You’ve really started to see that flatten out over the last couple of months, seeing interest rates come down, affordability improve a little bit, and so a little bit of firmness being put behind what had been a very soft housing market for the better part of this year.

Dave:
Yeah, we’re going to dig into that. You just mentioned a couple things I really want to make sure everyone here understands, but when you said 1.1% year over year, is that nominal prices or are those adjusted for inflation?

Andy:
Non adjusted for inflation? That’s just nominal home price growth up 1.1% from the same time last year. So that’s pretty soft. We’ve seen level, we saw it for a couple of months there, 2022, 2023 as right after mortgage rates got up above 6% for the first time and you saw the housing market cool off. We were right around in that range, but prior to that we haven’t seen those levels of home price growth since 2012. So a very soft dynamic compared to what we’ve seen over the better part of the last decade out there in the market.

Dave:
And it’s important that everyone in the audience listening here understands the context here because yeah, 1.1% up sounds great and it is better than things being negative, but if you do adjust that for inflation, it’s what you would call probably negative real price growth. It is not growing, it is not keeping up with inflation. And as investors, that is one of the key parts of real estate investing that you want to have. And these things do happen. It’s not like some emergency, but I think that’s sort of an important threshold that we’ve crossed is that home prices are not keeping up with inflation anymore.
Now it has been softening. This trend has been going on for what, two years now we’ve, we have these crazy numbers, then it went back to normal numbers. Now we’re a little bit soft. The prevailing media narrative that we hear is that inventory is going up and a lot of people are pointing to you and say, oh, this is a crash. But you said sort of the opposite, that that’s sort of cooling off. And in my perspective, tell me if you think differently, the fact that sellers are sort of starting to step back in this market is a sign that this is a normal correction. Isn’t this what you would expect to happen?

Andy:
And honestly, we saw a similar scenario play out, as I was mentioning a second ago, back in 2022, 2023, we moved into a very soft price dynamic back then as well. What’s somewhat unique about the market today is sellers still have a stranglehold, for lack of a better word on the market. And every time we’ve seen home prices soften up, sellers have kind of stepped back, right? There’s not enough distress in the market from a mortgage performance standpoint, a foreclosure standpoint to really have sale activity outside of your traditional homeowners that would provide that volume or that willingness to accept lower prices. So I mean, that’s not to say that we can’t see home price softening because I think there certainly is that potential, but you certainly have kind of this firmness from sellers that’s quietly saying, Hey, if I can’t get the price that I want, I’m either not going to list or I’m going to pull my home off of the market.
It’s controlling that supply. So even in areas like Florida and Texas, and we saw some of that softening move out west, right? I live in Denver, we had seen inventory grow to twice its normal levels here. We had really started to see prices soften up and then really since from may forward to today, we’ve seen that seller step back there. You’ve seen those surpluses start to pull back towards a little bit more normal levels and you’ve seen things firm up a little bit, right? They’re still down, but much firmer. And so it is controlling prices to some degree out there in the market.

Dave:
It’s something we talk about a lot on the show, and I want to just reiterate here is that sort of the difference between a normal correction, which I would sort of think venture guests that we’re in or entering or we’re somewhere near a correction right now and a full-blown crash is this element of forced selling where people who don’t want to sell are forced to because they’re unable to make their mortgage payments. And as Andy said, and we’ll dig into a little bit here, that part hasn’t materialized, and that means that most people for a lot of Americans, their primary residents is where they hold most of their wealth
And
Maybe they want to sell, but they’re just not willing to accept a lower number than they have in their head, and they’re willing to just keep living in that house until they can get that number. Or maybe they’ll just live there indefinitely. And that’s sort of why we’re seeing what is more of a normal correction because no one’s forcing these people to take a 10% haircut on their homes and they’re probably not going to voluntarily do that.

Andy:
Yeah, I think you can look at it both from the supply side and the demand side, right? Supply side, yeah, you’re looking for that inventory coming out of the market, whether it’s foreclosure or short sale or distress sale that’s coming outside of your traditional home sellers that have that lack of willingness, for lack of a better word. The other area that I would look at is the demand side of the house as well. We have consistently seen demand move along with interest rates. So anytime we’ve gotten these reprieves and interest rates like we’ve seen over the last couple of weeks, you’ll see a corresponding response in demand. That is the sign of a pretty traditional and healthy market as well. Where you would start to look for concern is if you start to see the labor market soften and interest rates soften along with that and demand doesn’t return,

Speaker 3:
That

Andy:
Would be a sign of something new and different and maybe more concerning as well. We have not seen that, so over the last couple of weeks, part of the reason that we’ve seen interest rates come down is the labor market softened. There’s increased expectation that the Fed is going to cut here in coming months. It’s brought mortgage interest rates down, but as those rates have come down, the labor market hasn’t been so soft that it hasn’t brought demand back. So again, we’re still in that. I think you quoted it as a normal market environment. I think that’s a fair categorization. If we saw things play out like that rates came down and buyers didn’t respond, again, I would be a little bit more concerned about what’s going on out there in the market.

Dave:
That’s a very good point and something we should all keep an eye out for. The other thing you hear though is a lot of folks are saying that whether it’s due to a recession, a weakening labor market due to new people in the Fed that we might see rates get pushed down significantly over the next year and are saying that appreciation might accelerate in that environment. What do you make of that theory?

Andy:
We’ve seen some of that right over the last couple of years as rates come down, it’s been six and a half percent has been that barometer for mortgage rates where when we’ve gotten below that 6.5% range, it’s firmed up prices. The difference now is, I mean, we talked about some of the pullback in supply out there. We still have a lot more supply than we did a couple of years ago when we were in this situation, we were at a 40% deficit versus normal levels, then we’re closer to a 13 14% deficit right now. So a little bit more supply out there in the market, but I think that’s a fair point. If interest rates come down a little bit, you could see that
Firmness return to the market. And I think there’s already some signs of that over the last couple of weeks of response, certainly from a refinance perspective to rates coming down. Same thing on the demand side. If you look at some of the application numbers that came from the NBA last week, they signal buyers returning to the market, which would suggest a little bit more firmness in home prices. Will it lead to a significant re-acceleration in home price growth out there? We will see, right? We’ll see how long rates stay where they’re at right now. We’ll see what happens on the supply side, and do we start to see that really backtrack, which could lead to some accelerating home prices or does it hold about where it’s at right now? But I think it’s fair if rates stay in the low sixes to expect a little bit more firmness in home prices than what we have been seeing.

Dave:
There’s definitely a rush for refinance. I think I’ve gotten three calls from banks today asking me if I wanted to refinance any of my mortgages dropped a quarter of a point or a half a point. But to me, one of the big lessons of the last four or five years is that supply response to affordability as well. It’s not just demand and all these folks were calling for a crash when interest rates went up and it didn’t materialize because even though demand did fall off, so did supply people stopped listing and not directly proportionate ways, but it also responded. And I think that when people say, oh, rates are going to go down and prices are going to go crazy, they’re sort of forgetting that lesson that if we get more demand, all the folks that Andy just mentioned that are choosing not to sell their home might choose to sell their home. And so we might see an increase in demand, but we also might see an increase in supply, which could still, as Andy said, lead to a firmer market, but might be a reason that we don’t all of a sudden see these COVID situations come back. And I feel like a lot of people are assuming that there’s going to be this situation like the COVID era happen again when that was a very once in a lifetime kind of thing, and expecting that to happen again is probably not the most likely scenario.

Andy:
I mean, that was driven by interest rates in the two and a half, 3% range. We’re still above six right now. So it is a night and day different environment from an inventory perspective, from a home affordability perspective, we are completely light years away from when or where we were then as well.

Dave:
Let’s talk a little bit about some regional differences. I was looking at at your report and saw that you live in Denver, like you just said, I invest in Denver. I used to live in Denver for a long time. I think it was the number one market for balance between sellers and buyers. Is that right?

Andy:
Yeah, yeah. In terms of inventory surplus is number one. As I mentioned, there was twice as much inventory here as you traditionally would see just a few months ago. That’s come back down to earth. You’ve seen 20 to 25% pullbacks in seasonally adjusted inventory in some of these markets that have been softer. But I mean, Denver’s kind of a poster child for that. You’ve seen, we all know the Gulf Coast of Florida, the Austin, Texas storylines that have been out there, they’re playing out in a somewhat similar way right now. These are the areas that saw the largest balances, I guess I would say, or surpluses of inventory in some of these cases. They’ve seen the largest home price pullbacks in recent months and correspondingly the strongest corrections, for lack of a better word, in terms of supply here over the last couple of months as well.
So those areas where sellers are pulling back are those Floridas, they are those texases, they’re the Denvers, they’re the parts of the west where we had seen inventory push really high. Those sellers are pulling back. So the softest markets are the areas where we’ve seen a little bit more firmness come out here over the last couple of months. When you look at the higher end of the market, which I think we all know this, but the Midwest and Northeast are areas where home prices have been firmer, you’re actually seeing a little bit softer dynamic right now. You’re seeing those prices come back to the middle as well. So it’s kind of this odd phenomenon across the country where the high ends coming back to the middle, the low ends coming back to the middle, and it’s all just kind of squishing into a little bit of a softer dynamic across the country right now.

Dave:
It makes sense. Yeah, it’s sort of a continuation of what we’ve seen over the last couple of months. I was just thinking when you were saying that, that I’m sort of the perfect poster child for what’s going on in Denver and what we were just talking about. I had a property single family that the tenants sort of longtime tenants chose to leave, and I was thinking, oh, maybe I’ll sell it. This is like a decently performing asset, not my best. Maybe I’ll sell it. And I just looked at that supply demand imbalance and I was like, nah, I’m good. I’ll rent it out for another year. So that’s just a representation of no forced selling, no one’s going to force me to sell. I’m probably not going to get the price that I want. It’s probably going to sit on the market longer than I want, and I’d the option to just rent it back out, make cashflow. It’s great. I’m going to do that. Still have a 3.75% mortgage on that property. I’m

Andy:
Guessing you’re one of those people that refi at the bottom and you’re making good cashflow on it. So yeah, there’s a lot of that activity going on out there.

Dave:
Exactly. So I think that’s a good example. So that’s going on sort of broader in the housing market. Let’s talk a little bit about mortgage performance. We were talking about how that really impacts how soft this market might get. We do have to take a quick break though. We’ll be right back. Welcome back to On the Market. I’m here with Andy Walden going over the ice mortgage monitor for September before the break, we’re talking about just what’s going on with home prices and supply and demand dynamics. And we talked a little bit about mortgage performance and how that really impacts prices in the housing market and inventory. So Andy, tell us a little bit about what the data is showing for mortgage performance.

Andy:
And I think it’s somewhat similar to the housing market. We’re seeing this softer but not overly concerning dynamic out there. Same thing is going on from a mortgage performance standpoint. You’re starting to see delinquency rates gradually trend a little bit higher, especially among borrowers and FHA mortgages, which is where the risk is really concentrated in today’s market. But delinquency rates remain very low from a historic perspective. We’re still half a percentage point below where we were entering the COVID pandemic in early 2020 from a delinquency rate perspective, so not overly concerning there. And then when you kind of look at the health of mortgage holders and homeowners as a whole, we’re sitting on a very high credit population. The average mortgage holder in the US has about a 750 credit score.

Dave:
Wow.

Andy:
We’re sitting on properties that are 55% equity, 45% debt, so they’re lightly leveraged out there in the market. And so I mean, you kind of look across all of these various thresholds and performance characteristics and things are relatively good. Now, again, you’re starting to see delinquencies rise in that FHA group. There are some areas of legitimate concern, right? Where we’re seeing labor soften, we’re seeing student loan debt collection resume. We’re seeing a shift in FHA loss mitigation guidelines later this year. So there are a lot of reasons to keep an eye on mortgage performance, but all in, we’re trending higher, but off of very low levels and still pretty low historically.

Dave:
So for everyone listening, when you see those headlines that say foreclosures are up 30%, it’s true, but look at the baseline. Look at where we are. You got to zoom out on this sort of data. And I think this is just a very important difference between what was going on last time we saw correction. It’s hard to believe, but really last time I saw significant softness in the housing market for an extended period of time was really the crash. I know in 18 it got a little weak in 2022, but nothing super concerning. And so this is really sort of a big trend. One of the crazy things in your report, you have this very cool chart that shows non-current rates by vintage, which sounds fancy, but basically what it is is how many people are delinquent based on what year or what era they got their mortgage. And the mortgages that are delinquent in the highest amount, I’m sure I, I’m just shocked by this, are still mortgages that were originated before the crash pre 2009. Is that right?

Andy:
It is true. And I mean there’s bias there. So when you look at loans that were taken out 15 plus years ago, the folks that were able to refinance out of those that qualified for a refinance have refinanced out of those.
So you have a higher risk residual sitting there, but those were higher risk mortgages anyway, so it’s kind of compounding what was already there. It would’ve been true a decade ago. It’s still true now. It looks a little worse now because if you’re still sitting in a 15-year-old mortgage, there’s a reason that you’re sitting there and haven’t been able to refinance out. But the same storylines holds true is that credit risk being taken, the loans being given out over the last 15 years are much higher quality loans in general than what we’re given out from 2000 through 2008.

Dave:
Yeah, it’s such a telling chart. It’s pretty amazing and basically charts interest rates. But yeah, so just as an example, the delinquency overall delinquency rate for people pre 2009, you’re showing about 10% as a counterpoint for 2020 or 2021. It’s about 2%. So a very big difference, like a five to one difference based on vintage and interest rate. And there’s all sorts of, as Andy accurately pointed out, there’s all sorts of variables there, but I’m just shocked by that, that the delinquency rate is still being driven up by those owned loans.

Andy:
It for sure is. And I think on the other end of that spectrum, you mentioned those 2020 and 2021 vintage loans, you were just talking about an investment mortgage you took out at that point in time where you were able to refinance into a two and a half, 3% rate. Those borrowers and those mortgages still make up one third of all active loans in the US right now, and they are performing very, very well because for investors, the cash flows are still strong for existing mortgage holders that live in those homes. They’re able to perform on ’em because they locked in very low monthly payments. So if you look at why are we seeing stress in auto debt and credit card debt and student loan debt and not seeing it among existing mortgage holders is because a third of the population is still locked into very low interest rates and they’re performing on those loans, and so it’s holding those overall delinquency rates down.

Dave:
I am curious, when you look at those other delinquency rates, I don’t know how much you and your team study those, but do you have any fear that that will spill over into other parts of the economy or into the mortgage market?

Andy:
It’s certainly something we watch closely. The student loan debt has been the most recent example of that, where you have roughly 30% of borrowers inside of these FHA loans that also carry student loan debt. So there’s a lot of overlap between those different debt structures and what you see in the mortgage space. And so when we saw that resumption of student loan debt collection over the last few months, there were absolutely questions of how is this and is this going to impact folks’ ability to make their mortgage payments? So far it’s been relatively light. Now people that are past due on their student loan payments, if you overlay those particular borrowers and look at their mortgage performance, you’re absolutely seeing an impact there. But for folks that just have student loan debt that they’re paying on or student or don’t have student loan debt, those two subcategories are kind of trending along with each other so far this year. I mean, folks that have student loan debt are earlier in their life cycle, and so they’re more likely to be delinquent on their mortgage anyway, but not a massive uptick in that particular category, but absolutely something that we watch. And when you see stress in all these other categories, we’ve got some data sets that overlay all that data on top of mortgage data. And so we’re kind of parsing that apart in looking for additional signs of weakness or early signs of weakness in that mortgage space.

Dave:
That makes a lot of sense. I didn’t realize there’s that big of an overlap. And I think, correct me if I’m wrong, but I think starting in October, so in a couple of weeks, isn’t there a new law where wages can get garnished for student loan delinquencies that I guess if there’s this big of an overlap, could start to hit the mortgage market?

Andy:
Yeah, absolutely. Yeah. So yeah, you’ve started to see that debt collection resumption take place over the last couple of months. And so yeah, we’ve been watching that closely here kind of from May, June, July to look for those early signs. Again, nothing overly concerning coming out just yet, but it’s certainly something we’ll be watching for the foreseeable future, just given how sharply student loan delinquencies have risen this year. Certainly all eyes on that data for any signs of weakness there.

Dave:
Well, I find this encouraging news. I know there are some investors out there who want there to be foreclosures in terms for inventory. I am not one of those people. I think this is very good news for just the health of the housing market and for society in general that there’s not a lot of foreclosure. So it’s good to hear that most American homeowners are still in good shape. We have one more topic to cover, which I’m very eager to dig into, which is property insurance, because this has gotten insane and I’d love to hear your insights here, Andy, but we’ve got to take one more quick break. We’ll be right back. Welcome back to On the Market here with Andy Walden talking about everything that’s going on in the housing and lending market. We’ve covered the housing market. We’ve talked about foreclosures and mortgage performance. Now we got to talk about insurance costs. You in your report show that the average premium is up 11%. That is crazy in one year. Is that the highest you’ve ever seen for a single year?

Andy:
It was slightly higher than that in the preceding 12 months. So we’ve pooled off.

Dave:
So it’s just two bad years in a row.

Andy:
Yeah, yeah. Good news, bad news scenario, a little bit slower rate of growth, but we’re still up 11% from the same time last year.

Dave:
And it also showed that the average price of insurance is up 70% in the last five years. So I have some ideas, but tell us why is this happening now?

Andy:
It’s combination of factors, right? Certainly rising home prices, rising coverage carry on homes is a part of it, but you also have more frequent perils. We’re seeing more frequent wildfires, flooding, hurricane disasters. The cost of labor and materials to repair and replace in the wake of these disasters has gone up as well. So it’s multifaceted and all of them are pushing those prices higher.

Dave:
Wow. And is there any hope that this is going to slow down?

Andy:
We’ve seen some little snippets of good news in the numbers here. They really come when you look at it from a geographic perspective. So again, the good news, bad news is the most expensive areas of the country to get insurance are probably the areas that come to your mind first, your Floridas, your Louisianas significantly outpace the rest of the country in terms of how much it costs to ensure your home. The good news there is you’ve started to see some pullback in reliance on state backed plans in those particular areas. You started to see some flattening of insurance premiums in those particular areas. And a small handful of markets where the average insurance payments among homeowners actually came down just a little bit in parts of Florida and parts of Louisiana. So a little bit of good news there. Again, it’s good news, bad news because those are still the most expensive markets by far across the country.
The bad news on the other end of that spectrum is you look at some of the areas that were the least expensive from an insurance standpoint, which is kind of your western us, and now the wildfire risk, especially in the wake of what we saw in Los Angeles earlier this year, is leading to some of the largest insurance increases in those areas. So Los Angeles, 9% rise over just the first six months of 2025, roughly a 20% growth in the average insurance premium paid by homeowners in Los Angeles over the last 12 months. And so the areas that have been doing well are seeing these big pops in insurance costs. The areas that have really been struggling, the bright news there is that it started to slow down just a little bit there at the high end of the market.

Dave:
Okay, that makes sense. I’m glad to hear that it’s slow slowing down, at least in some places because this is getting very difficult for average people. I’ve quoted this stat a few times on the show, so bear with me if you’ve heard it, but I think in parts of Louisiana, Alabama insurance and taxes are now as much as principal and interest in some stuff, and that’s just crazy. It’s basically a second. It’s basically a second mortgage that you’re paying. And yeah, it’s definitely impacting the markets there. You just think about overall affordability is severely strained by these things, and there are a lot of folks, older folks in those communities too, who have relatively fixed incomes and these expenses are hurting them. So hopefully there’s some slowing of this trend at

Speaker 3:
Least.

Dave:
So I mean, is there anything you can do other than move to a place? Are there ways that homeowners are finding relief?

Andy:
There are some, right? And I think they’re probably the simple ones that you would probably think of. It’s shopping insurance, right? Shopping insurance across various carriers. Similar to taking out a mortgage where you can compare fees and costs and interest rates being offered across different lenders out there in the market. You should be doing the same thing from an insurance perspective. And there are studies by our ice climate team that shows that folks that have been in their home and been with the same insurance carrier for the past decade are paying significantly more than folks that are shopping and switching those insurance policies over time. So one of them is just comparing your carrier versus other carriers. I’m sure a lot of folks, I guess maybe may or may not be aware of the fact that insurance carriers are trying to move in and out of different markets to balance their portfolio and their risk, and it can cause them to raise their premiums to try to have some natural attrition or to try to offer more aggressive premiums to move into specific markets.
So again, just shopping your insurance to make sure that you are getting the most cost effective policy out there. A couple others, making sure that you have the right coverage amount. We all know that we don’t want to be underinsured. You want to make sure that you’re covered to replace the structure and the content of your home if something bad were to happen. But you also, if you have a $500,000 home, you don’t want to be carrying one and a half to $2 million of coverage either. So making sure as things shift over time and the cost to replace shifts over time to make sure that you’re properly and adequately covered but not overpaying or over covering your home. And then there’s been a lot of movement from a deductible perspective as well, right? A lot of homeowners that are taking on larger deductibles to improve their monthly cashflow or vice versa.
And so that’s another thing that you can look at as well, right? And that’ll depend on a person by person basis. Maybe if you’re earlier in your homeownership journey and you don’t have a large reserve fund set up, maybe you want to have a lower deductible. Maybe if you’re a more experienced homeowner and you do have a backstop there or a bigger nest egg, you could take on a larger deductible to improve those monthly premiums. So all of those things can be done. Again, it’s all kind of working with those insurers, shopping those insurance policies and finding the one that fits best for you. That is the most cost effective.

Dave:
Awesome advice. Thank you. I know these do sound like somewhat simple strategies, but it is so true. I’m guilty of doing this as well. You just sign on with a carrier

Andy:
And you stay there, right?

Dave:
You just

Andy:
Stay there. You’re not forced to move. Sometimes you don’t, right? And you don’t realize that you’re paying more than you need

Dave:
To. The other thing I’ve noticed just from the investor perspective is if you have multiple properties bundling them, they are more willing to negotiate with you on principle as well. So shopping around when you have multiple assets is even, I think more beneficial because you are bringing more properties, but also less overall risk if you’re spreading that risk among five or 10 properties or whatever that you’re bringing there. Last question for you, Andy, is, I sort of alluded to this, that affordability is being strained obviously by interest rates, obviously by home prices, but I think this is part of it too as well. And so I’m curious if this is going to spill into the housing market in terms of people not being able to qualify for mortgages because insurance is screwing up DTI ratios.

Andy:
Yeah, it’s a bigger and bigger topic of conversations in two different areas, right? One is upfront being able to qualify for the home in the first place. So if you look at the share of monthly payments going to insurance, it’s close to 10% nationally. But you hinted at this earlier. If you look at areas like Miami or New Orleans, one out of every $4 that you are paying is going directly to property insurance for the average homeowner in those areas, let alone the highest risk homeowners in those areas. And so certainly putting pressure upfront on debt to income ratios, and you’ve, you’ve seen that manifest more recently because home prices are up, interest rates have been up, and you’re seeing p and I pressure on DTIs along with this insurance pressure
As well. The second piece that we’re hearing about it more and more in conversations that we have with investors and folks that invest in mortgages is what is this doing to debt to income ratios post origination? So at least when you see them upfront in a traditional debt to income ratio, that’s factored in along with your income. But for folks, as you mentioned earlier, that are on maybe a fixed budget, if you have a large share of your PITI going to the variable components like taxes and insurance and those variable components are rising, your DTI can rise post origination. So you may have risk inside of your pool of mortgages or your investments that you don’t even know are there. And so we’ve put some new data sets out there that track that over time, that look at those variable costs because again, there’s a lot of folks in that investment space that are really trying to figure out what does the true risk look like here? What’s the true loan to value ratio of a particular asset? What’s the true debt to income ratio of a particular asset now versus maybe what it was 12, 24 months, five years ago when that loan was taken out?

Dave:
Okay. Well that’s definitely something to keep an eye on, right? Because it does seem like it’s going to impact demand, especially if these trends continue and we keep seeing these things.

Speaker 3:
Yep.

Dave:
All right, Andy, well thank you. Is there anything else you think our audience should know based on your research before we get out of here?

Andy:
I mean, I think those are the big ones. The other one obviously is where are rates going? That’s always the question market.

Dave:
Give us your forecast.

Andy:
Oh man. The crystal ball. Lemme break it down. By the basis point, no, I mean obviously nobody knows where rates are going. I always think one piece of data that’s always interesting to share is just what is Wall Street pricing in terms of mortgage rates?
It doesn’t mean that they’re a perfect indicator of where things are going, but you can see where big investments are placing their bets. And so if you look at ICE’s futures data, basically what that shows is they’re pricing in 30 year mortgage rates about six and a quarter around December. We’re at six and three eighths right now. This slow and methodical movement in interest rates, certainly. I mean, I think a lot of folks think the Fed is about to move the market’s pricing in three Fed cuts, which is three quarters of a percent. Mortgage rates are coming down three quarters of a percent over the next couple of months. It’s just simply not the way that it works. But if you look at what’s being priced in there for mortgage rates, it is a modest improvement later this year and into the spring down into the six and a quarter, their pricing in 30 year rates, maybe six and an eighth as we get into the early stages of 2026. So some modest improvement, but maybe not what you’d be expecting if you just look at projected fed rate cuts there.

Dave:
That makes sense. And I think we’re recording this on September 12th. Fed is very likely to cut rates next week, and I think we’ve seen rates come down, but I believe the cut is already baked into those rates. So we’re not expecting next week to be a big change.

Andy:
Yeah, that’s kind of way to think of. It’s the mortgage market and 10 year treasuries tend to move in anticipation of the Fed. So by the time we get to the Fed Day, you tend to have 10 years and 30 years already priced in where they think the Fed is going to be. And it’s not just the September cut they’re pricing in. What do they think the Fed is going to do throughout 2026 as well? So the reason that we saw the needle move here over the last couple of weeks is the outlook for the Fed and how aggressive they’re going to be has dramatically shifted over the last couple of weeks, which has shifted those 30 year rates. But if the Fed moves as expected, maybe marginal movement in 30 year rates.

Dave:
All right. Well, I’m glad you have your crystal ball. I

Andy:
Am as

Dave:
Confused as everyone

Andy:
Else. Crystal

Dave:
Clear. Well, thank you so much, Andy, for being here. We really appreciate your time.

Andy:
You bet. Appreciate you having me.

Dave:
And thank you all so much for listening to this episode of On The Market. We’ll see you next time.