Rates Fall to 5% Range as Big Investor “Ban” Gains Support

0:00We are only a single week into 2026, and there is already so much news about the housing market. We're talking about mortgage-backed security buying, a potential ban on institutional investors, and much more. We're getting into all that on today's episode of On The Market.

0:22Hey, everyone. I'm Dave Meyer here with Kathy Feke, Henry Washington, and James Daynard for today's episode of On The Market. Kathy, good to see you. Thanks for being here. Good to see you. And congrats to Henry. Woo-hoo. Why are you congratulating Henry? You have to tell everyone. Well, I'm sure they know, but Henry has been chosen to be your co-host on the big show. And no one is more deserving. Henry's just the best human in all ways. I mean, when we go out, I feel bad about myself because he gives the biggest tips to people. Oh, just the biggest heart. He does. Yes. And yes, Henry, congratulations.

1:01Now you have to spend even more time with me, unfortunately. Thank you very much. That's very kind, Kathy. You're the perfect pick, Henry. That's what we were just talking about before you hopped on. Thank you so much. We're very excited to have Henry, but nothing is changing, by the way, on this show. We're all going to be here rambling in your ear very often here on On the Market, so nothing is changing with that, but you will be seeing Henry Moore on the BiggerPockets Real Estate Show, which we are all delighted about. But we're here to talk about some news today. And man, there's some slow weeks in news.

1:35There are times when we're preparing for the show, there's not that much to talk about. But man, there is a lot to talk about this week, already in the first week of 2026. So let's just jump right into it. Henry, you're the man of the day. So you have to go first. Tell us what your news story is. Well, my news story is one of the hot, hot button issues that's been coming up over the past two days. It's from CNN. And it basically says that Trump says he wants Fannie Mae and Freddie Mac to buy 200 billion of mortgage bonds. And essentially, it sounds like what he's trying to do is to get interest rates down.

2:13He's talked about he wants them down for a long time now. And now I think we're starting to see a little bit of what he might think is a plan to do that. So this would make them one of the largest buyers in the market overnight, and it should, air quotes, increase demand for mortgage bonds immediately. More demand should essentially push yields down, lower yields, puts down the pressure on mortgage rates, and then hopefully that helps the consumer have lower monthly payments. The real question is, is that really going to work? It worked today. Mortgage rates went down. It's the lowest since 2023.

2:5123. We got rates at 5.99 today. We got fives. Yeah. We're in the fives, man. I know. There's something psychological about it that feels a little good. And we're recording this on January 9th. So who knows where things will be? Yeah, because the market's moving in anticipation of this coming true. We don't know if it's actually going to come true, but the market seems to think so. And so they went down 20 basis points. I read some analysis of this today where experts were saying this amount,$200 billion of buying, would bring down rates 0.25. So we may have already seen all the benefit, just so everyone knows.

3:32Like it might not keep going down unless there's more bond buying. But I'll explain in a minute that there are limitations to the way they're doing it right now. So get your mortgage now. Yeah, seriously. It's a good day to lock in a mortgage right now. You can only manipulate the markets for so long, you know. So take advantage now. I mean, I don't know if you guys saw the GDP now with the Atlanta Fed, but it is showing over 5 % GDP for Q4. Who knows? The GDP now is kind of a way to gauge the gross domestic product rather than having to wait every quarter. They keep up with it every week. And it is showing, I don't know why, but a very robust Q4.

4:13And if that is true, then, you know, you wouldn't see mortgage rates down. So take advantage now, man. This is just a brief manipulation of the market. Yeah, I mean, I don't know if it sticks because this isn't the only factors tied to mortgage rates going down, right? They're still tied to inflation expectations. They're still tied to the investor confidence in the housing risk. And it's tied to supply, right? And technically, there's still a shortage in supply. So I think if you factor in everything, I don't think if it works, doesn't mean we're going to see something with a two or three in front of it anymore.

4:52I think five is pretty stink, stinking good. So I agree with you. Get to shopping. When I think that is the important thing, because I was talking to somebody yesterday and they're like, oh, my gosh, rates are going to drop rapidly. Like if this goes, like Dave said, what is a quarter point? And that might be the most movement it gets. And so, you know, every quarter point helps, but it's not going to be COVID appreciation during that time. No, there's like an important technical difference between how this is being done versus how it was done during COVID. So this is going to be nerdy. But basically during COVID, what they were doing was something called quantitative easing.

5:30They were basically essentially printing money to buy mortgage-backed securities and treasury bonds. That has a very inflationary effect, as we all saw. It helps push up prices. What's going on now is kind of similar in that the government is still or government backed entities, at least, are still buying these mortgage backed securities, which does the same thing. But they are apparently we don't know exactly how this is working. It's apparently being bought with profits from Fannie Mae and Freddie Mac. So they're not inventing money to buy it with. That's not quantitative easing. So that's an important distinction.

6:06It still has the same effect. But I think what everyone needs to know is that it would be a different policy and I think a much riskier policy to go beyond this, because if you're going to do more of this, like if the Trump team or people just say, hey, that worked. If we've got rates down a quarter point, we want them down a full point. We're going to buy a trillion dollars in mortgage-backed securities. The way they would have to do that is through quantitative easing, which has a much bigger risk of inflation attached to it. And so we might not see that. We might see that with a new Fed chair or new Fed governors.

6:42We don't know. But I just want to say, like, it would need to be a different policy to keep doing this well into the future. So I know we're not supposed to get political here, but I think we're going to see a lot of this type of thing this year with midterms coming. Certain people want to be popular to the public. This is just my thought because it is very temporary. And my concern is that whenever we see rates go down, prices go up, right? So if that happens, then it doesn't actually make the market more affordable. No, I totally agree. I think this is a band-aid, like a lot of things in the housing market where you're just, anytime you do demand side support, like whether it's this or helping people with their down payments, I'm not saying it's wrong, but all it does is temporarily improve affordability, then prices adjust to this new affordability and you still have the same affordability problem.

7:36I'm not opposed to short-term solutions if they are paired with long-term solutions, right? Like if you're doing this and you're making more supply, Great. That's a long-term solution paired with a short-term solution. Everyone wins. But when you have just these short-term things that make the long-term problem worse without implementing anything that makes the long-term problem better, I just think it's like we're going to be back in the same place six months from now where things are unaffordable and then the solution becomes even harder. So I'm not sure I'm in favor of this. It's not so big that it's going to, I think, create a crazy appreciation in housing prices.

8:13But I have concerns about using this as a tool to solve affordability. I agree to like capitalism. It's supposed to you're supposed to let it do what it does. And like there's too much manipulation of it now. Yeah. Let it grow. Let it shrink. Let it expand and contract when you manipulate it too much for the wrong reasons or sandwiches that are now 20 bucks are going to turn to 30 bucks real fast. It just gets wonky faster when you start manipulating things. Yeah. Yeah. I don't know. I'm not blaming one side or the other, but I guess it's just become politically untouchable now for either party to like have a recession or a decline in the stock market or a decline in the housing market.

8:53And they'll do whatever they have do. Both sides do this. We'll do whatever they have to to keep things going. But that's not healthy. Like there's a normal business cycle. Like when there's too much debt, when their affordability reaches these low levels, it's got to reset. And it stinks for a little while, but then it can recover. Whereas now you do like I'm not saying because of this one move, a quarter points not going to do it. But if you keep doing this, then the bubble risk becomes real. Like that's when bubble crash risk really starts to accelerate. I'm not saying that's happening right now.

9:25But like I you know, if we do this once with money that's not being printed, real profits, maybe this is fine. But I do worry, like Kathy said, like, you see, this works like the first thing that's really moved mortgage rates. It's going to be tempting to do again. And so it'll be it'll be interesting to see if this happens more. Yeah. Well, that's a big story. It's something we're definitely going to keep an eye out for. My hypothesis is this will happen. And then we will hear a lot about this again in May when Jerome Powell almost certainly gets replaced by someone new. Just to everyone knows, Jerome Powell does not unilaterally make these decisions.

9:58The Fed board votes on these and not all of them are getting replaced. So certain votes will change. But I do think if the makeup of the Fed changes significantly, we'll hear more about this over the summer. All right. That was our first story. Thank you, Henry. A very timely one I'm sure everyone will want to be hearing about. We got to take a quick break. But when we come back, we'll talk about this week's other huge story about a potential ban on institutional investors. We'll be right back. Passive income sounds amazing until it involves 17 apps and active maintenance. That's where the Gemini credit card comes in.

10:36It earns you Bitcoin back on everyday purchases automatically. You use it like a normal credit card for lunch or gas or groceries. And every time you swipe, you earn up to 4 % back instantly in Bitcoin or one of over 50 other cryptos sent straight to your Gemini account. No points to track, no categories to activate, no waiting to redeem rewards. It just shows up and there's no annual fee, which is great because paying money to earn rewards has really never made much sense. So if you've been curious about building your Bitcoin stack without constantly thinking about it, this is one of the simplest ways to start.

11:10Go to Gemini.com slash card to learn more. Terms apply. See the link in the description for more information regarding rates and fees. Issued by WebBank, some exclusions to instant rewards apply. This is not investment advice and trading crypto involves risk. Check Gemini's website for more details on rates and fees. Thinking about wholesaling or flipping your first property but not sure where to start? The truth is, deals don't just fall into your lap anymore. You need to go out and create opportunities. That's where PropStream comes in. With PropStream, you get instant access to over 160 million properties nationwide.

11:39Use 20 pre-built lead lists such as pre-foreclosures, tax delinquencies, and vacant homes to find motivated sellers fast. And now, PropStream has integrated batch leads and batch dialer to provide you with a complete all-in-one solution. That means you can not only find motivated sellers, but you can also reach out right away. Skip trace phone numbers free on select plans, then send postcards, emails, or call sellers directly. Don't worry if you're new. PropStream also gives you AI-powered insights and comps that are over 99 % accurate, so you know you're making smart offers. Plus, you'll have access to PropStream Academy to guide you step-by-step.

12:13Start your 7-day free trial and get 50 free leads at propstream.com. slash BP. That's P-R-O-P-S-T-R-E-A-M dot com slash BP. Don't just dream about real estate. Make it happen with PropStream. You insured the walls, the roof, the plumbing. That means the building is protected, but the business may not be. Most real estate investors cover the property, but if you run deals through an LLC, manage properties, hire contractors, or work with clients, landlord insurance only goes so far. It doesn't cover lawsuits, professional mistakes, workers comp claims or cyber fraud. That's where next comes in general liability for real estate businesses, errors and omissions for agents and brokers, workers comp, cyber insurance, coverage built for real estate operators, not homeowners.

12:56Protect your real estate business at biggerpockets.com slash next.

13:03Welcome back to on the market. I'm here with Henry, James and Kathy going over this week's news. We just talked about the Trump administration buying mortgage back securities. Kathy, tell us your story. Well, this is breaking news this week. But again, by the time people hear this, it'll be old news, but we still need to talk about it. We do. Yeah. So I'll just read the CNN version of this. It's Trump threatens to ban institutional investors from buying single family homes. And this was what he wrote on True Social, that people don't live in corporations, you know, and so homeowners should be the ones buying and not institutional investors.

13:41So, you know, so many people have different opinions. Again, my opinion is this is a midterm election thing that people just want to hate the institutional investors. And in fact, when you look at the data, the institutional investors only own about 2%, 2, 2.5 % of property out there. But I think why some people get more upset about it than others is because it really depends on where you live. Institutions own 25 % of rental properties in Atlanta, 18 % in Charlotte, Tampa and Jacksonville. It's really high. So in those markets, yeah, there could be a huge impact if those institutions get out.

14:25However, Logan Motoshami at Housing Wire kind of mentions this. What about the people who live in those rental properties. It's kind of a question of the buyer or owner of real estate versus the renter of real estate. Who should get priority? And oftentimes, institutional investors are building it. They're bringing on new inventory. They love the build to rent communities because they're brand new. They're easier to manage. They're built specifically for rental. So they're bringing on new supply. So my guess is that Trump knows that. Yeah, I don't think they're banning that. I mean, It's very unspecified right now.

15:02It's not specific. We don't know. But they do buy from builders. So my guess is that there will be some kind of clause there that if it's, you know, I don't know, maybe new builds or something like that would be exempt or if it's specifically built to bring on new supply for renters. But if it's like to not compete with the home buyer who's trying to buy existing inventory, the hedge funds, the Wall Street buyers aren't really that active there anymore. I actually I don't think this is a bad thing at all. If it goes through. I agree. I actually agree. I don't think single family homes should be bought in swarms.

15:39We don't have a lot of that in Washington. There's definitely some sub markets. But if you look at, you know, as I think things get more and more expensive and it's not going to slow down over the next 10 years, people are going to be moving into these areas where the hedge funds do own a lot of these properties. And I think we do need to protect that supply and just let it be single family. They're not buying now, but I know they will, especially when they see the opportunity. But, you know, I think they're just there's a time and a place. I just think I think it's as a preventative measure, it kind of makes sense, right?

16:13It's not that bad now. On a national level, it is not what's causing the problem with inventory. It's just not. There's much bigger structural issues. But in those neighborhoods, it does matter in markets where it matters. The other thing I was thinking about is that right now, it's unaffordable for people to buy homes. These large institutions, they can self-insure. They get better mortgage rates than everyone else. And so they have a structural advantage in buying single family homes. And so it could get way worse. Like, that's the thing that worries me is that if housing remains unaffordable, who else is going to buy homes other than private equity?

16:54I think it's the practices. It's what they can do and are allowed to do when they buy these homes in bulk that really cause a problem. On a national scale, it doesn't move the needle that much. But you're right. In certain neighborhoods, yes, it's a big deal. I also agree with this to a point. My concern comes like, what is the actual language going to look like if this becomes real? It's a slippery slope to me. For sure. A corporation is an LLC owning one property is technically a corporation that affects, you know, you and I and other mom and pop landlords. And what's the difference between this and Airbnb owners?

17:32They're also taking away housing stock from people who should own homes. Like, what does that mean? Like, I think there's just there's a lot here that needs to be flushed out and done in a way that that makes sense and is truly done to solve the problem and the actual problem and not creating a bigger problem because investors play a strong role in a real estate market. We put inventory back into the market in a lot of cases. And so it's just, I think it can be, with the limited information we have from a tweet rant, it just could be a slippery slope. Well, in California, what was floated, I thought was a really good idea, which was to give a homeowner or a buyer first stab at it, basically.

18:20So an investor couldn't buy a house until it's been on the market like 45 days. Because if you're a first-time buyer, an FHA buyer, it's a pain for the seller. It takes a long time. But this is really the first-time buyer is the FHA buyer. It's a difficult loan. It may not go through. And if you're a seller and you've got an institutional hedge fund wanting to pay cash for your property versus a first-time home buyer, you don't know if they're going to close. You're going to do what's best for you as the seller. but if there was regulation saying nope just first time homebuyers or any homebuyers get first stab at it 45 days 60 days whatever it is after that free game anyone can have it what do you guys think about something like that i think it has to be tangible because you know 45 days on market what if someone's priced too high and then they just take a low offer from a hedge fund right yeah yeah i mean the one thing i do know is when i remember when this became a thing it was 2010-ish, and 11, when Blackstone came to the market and everyone looked at me and they go, you're going out of business.

19:23Blackstone's coming to market. And they started buying everything, right? But then what they found out is they don't want to buy everything. They want to buy something that's very lightly used and doesn't need a lot of renovation. And so I don't think like the mom and pops investor, to Henry's point, or the investors out there buying and actually creating value, they aren't the same thing. They're completely different investors. They don't buy the same things. The hedge funds do take inventory from first-time homebuyers. Yeah. That is the track homes that they buy. And I do think there should be some restrictions, like in Australia, and the reason I knew this is because I wanted to move there so bad.

20:04They don't allow any foreign entity to buy used homes. They can buy new construction to help with the economy, So they can only buy this product to help builders and help move those things. That's interesting. But they can't buy used. And so even when they're selling them, they have to sell it to an actual citizen. I like that. That brings inventory online. Yeah. And it also could bring in like, you know, more single family production getting made, right? If they can bring this cheaper money to builders and they can build and rent these out for a while and then they do sell them after a while because that's how they're really making the return.

20:37It's not the cash flow. So, you know, I think those kind of restrictions need to be put in, but it has to be a tangible can't be 45 days. It's got to be. Is it new or is it not? Is it multifamily? Is it you know, there just needs to be classed out. And I think it could be a very positive things for homeowners and also our economy if they balance it out right. Because I think some of these policies are kind of I don't know how to say this, but unfair to the renter. It's kind of like, well, what about the renter who would like to live in a nice home and don't don't they don't want to own it. They want to be in a certain neighborhood.

21:08They love the institutional landlords because they're professional. So what about the renter? That's a good question. I've never heard someone say they love institutional landlords, though. I would take a bet that the BiggerPockets audience are better landlords than the institutional investors, or I'd like to believe that. I would agree with that, for sure. Yeah, I don't know. I don't have personal experience with that, so I couldn't say. But I'll just say, I do think, I obviously believe that real estate investors play a necessary role in the United States. I think this talk that we're a renter nation is not true.

21:45If you look at the home ownership rate in the United States, it's remained the same. There is just for the last 60 years, about one third of people for one reason or another, whether because of preference or circumstance, needs to rent. And I don't think that those people should be only forced to rent multifamily. Like, I do think there should be single family supply. I'd just rather small real estate entrepreneurs own those properties if it was up to me. Like, you know, now I'm just manipulating market in my own favor. But I would just I think it's like better for the local economy and for the renters personally that small entrepreneurs own it rather than large institutions.

22:21And I think what you're really saying, and I could be putting words in your mouth, but I think what you're really saying is similar to the point James was making. Like the small entrepreneur, us, are buying a different product. We're taking things that either aren't lived in or shouldn't be lived in typically and providing that inventory to the market. And the bigger players are not doing that. And if they were, then they would be more a benefit to society than a detriment. Yeah, I mean, I almost feel kind of like I'm in the category of the institutional because the number that's been pulled out of the air is a thousand.

22:57If you own a thousand properties, you're considered big. Well, I have a build to rent community. I have two single family rental funds. We plan to do more. And I think we're doing great work. I think we're great landlords. We did exactly what Henry said. We bought old properties that no first time home buyer could buy because there wasn't a kitchen. It was moldy, whatever. Like we had to fix it up. and then we put it back on the market as really safe, clean housing, affordable housing. So again, more to discuss here. We're not at 1 ,000 units, so we're still under the radar. I do wonder if there's workarounds where all of, I've got three funds, right?

23:35So there's three different LLCs. So would that be considered three different? Oh, there's definitely going to be scams about this. There's 100 % going to be shell companies and people getting around this. But I guess we don't know. We'll see if they even put forward a bill. We don't even know. Yeah, they will. Yeah, I think it's a really interesting thing. So we will obviously let you know if anything develops here. But as of right now, just a potential thing. We do have to take a quick break, but we have two more stories when we come back. Stick with us. Thinking about wholesaling or flipping your first property, but not sure where to start?

24:10The truth is, deals don't just fall into your lap anymore. You need to go out and create opportunities. That's where PropStream comes in. With PropStream, you get instant access to over 160 million properties nationwide. Use 20 pre-built lead lists such as pre-foreclosures, tax delinquencies, and vacant homes to find motivated sellers fast. And now PropStream has integrated batch leads and batch dialer to provide you with a complete all-in-one solution. That means you can not only find motivated sellers, but you can also reach out right away. Skip trace phone numbers free on select plans, then send postcards, emails, or call sellers directly.