Dave:
Mortgage rates just climbed back over 6.7%. And while we’re all used to a lot of volatility in the mortgage market these days, here’s the part that should get your attention. It happened on the same day we got an inflation report that looked, at least on the surface, like good news. And that disconnect tells you almost everything about the market we’re in right now. Nothing is exactly straightforward these days and you need to go a level deeper to understand what’s going on and where the market is heading, which is exactly what we’re doing here on On the Market Today. We’re covering a lot of economic news that came out this week from inflation reports and the surprising direction of mortgage rates to the housing bill that finally got enacted into law and some fresh trouble in the credit markets that you should be paying attention to.
We’ve got three big stories and one big theme. The stuff that’s moving your deals and shaping the investing climate right now is actually happening away from the housing market not in it. This is on the market. Let’s get to it.
Hey everyone welcome to On the Market. I’m Dave Meyer, chief investment officer at BiggerPockets. I’m also a housing and economic analyst and real estate investor. Today’s episode, we’re going to be going through news as we often do because there is a lot to cover. A lot tends to happen mid-month with economic news, and that’s what we’re seeing here in July of 2026. The June inflation report just dropped and there’s just enough going on that I want to break down a couple of stories that you may not have seen because they’re not directly happening in the housing market day-to-day right now, but it’s still impacting rates, what’s going on with your portfolio and the American consumer. So we’re going to go over all those stories and as always, I’m going to tell you what each story means for you as an investor and what you should be thinking about with your own businesses.
Let’s get to it. First up, why are rates going back up? Why are mortgage rates back at 6.75? Though we were doing a little bit better and we were. Just for some context back in February before the war in Iran started, rates were at about 6%. That was great. Then when the war started and fear was super high, we had rates climb up to where they were today, but they had been gradually easing and getting a little bit better. We were seeing them closer to 6.5%, but now they’re back up again. Now, the weird thing about this that might not make so much sense, at least on the surface, is that inflation has actually improved a little bit. Just today, I’m recording this on July 14th. Just today, the CPI, the Consumer Price Index, which measures inflation across the economy came out and it was better than it’s been in several months.
It was actually down 0.4% month over month. The annual rate, which is what we usually talk about, fell from 4.2% to just 3.5%. That’s still elevated. It’s well above the Fed’s target of 2%, but it is moving in the right direction. And a lot of that, a lot of the relief came from gas prices as you can imagine. We up until a couple days ago had a ceasefire with Iran. Oil prices were falling down. They weren’t back to where they were before the war, but they were much, much better. We saw gasoline prices. The prices you’re paying at the pump fall about 10% in June. And so that really brought down the CPI. But the good news is that the core CPI, we talk about this a lot, but the core CPI is another thing that economists track. It removes food and energy from the total equation because those things are really volatile.
And the core CPI was flat month over month. That’s good. And it fell annualized to 2.6%, both good things. So even if you don’t factor in gas and oil and all of that, we still got a better inflation rating. So the question you should be asking yourself is why are mortgage rates going back up? What we always talk about on the show is that mortgage rates are very tied to 10-year treasuries and the spread. Those are the two things that we always talk about that is what impacts mortgage rates. But one of the major drivers of yields is inflation. And a lot of people have said if inflation gets better, mortgage rates will come down. Now I did a whole show on this recently and said I don’t think they will come down quickly, but I did say that if inflation gets better, rates will probably not go up.
So what happened here? Why are mortgage going up? Well, there are two reasons. One I think is kind of obvious and the other one no one seems to be talking about, but we’re going to get into it today. The first reason is that even though inflation has gotten better, that report is backward looking. We’re midway through July and we got an inflation report today for June. What’s happening right now is signaling that we’re not out of the woods on inflation. So yes, we got one good print, but that does not mean inflation has gotten better. And just over the last couple of days, the war and conflict in Iran is flaring up again. The ceasefire that we had for a couple of weeks, President Trump declared it over last week. There are fresh airstrikes going on. The Revolutionary Guard is attacking boats going through the strait of hormous.
The strait of Hormuz definitely not open. We’re seeing tanker traffic decline again and oil prices just yesterday went up 10% in one single day. So we are clearly seeing an environment where we got one good month amidst an environment of high inflationary pressure. And clearly right now what’s going on in the markets, especially with oil stocks, the bond market is that traders, people who influence this stuff who have lots of money like pension funds and hedge funds and sovereign wealth funds, they don’t think the strait is opening. If you look at the situation, I kind of agree. It’s really hard to imagine how this gets better. I know we just had a tentative ceasefire in place, but that fell apart pretty quickly and it seems like both sides are digging in even more. It doesn’t seem like we’re moving towards an agreement anytime soon. Even the other day, the Trump administration came out and said that the prospects of a nuclear deal is looking less and less likely.
And so if you look at this big picture, the inflationary pressure we had in March and April and May that eased in June is probably coming back. If we look forward to what we’re going to see in the July inflation data next month, it’s probably going to look worse. And the bond market doesn’t wait. It does not wait for that inflation print. They could read the tea leaves. The inflation fear is back even though it came on the day. Even though all this stuff is happening the day we got a good inflation print, inflation fear is worse right now even after that print. And that is the number one reason we are seeing mortgage rates go up. By the way, don’t expect the Fed to come in and rescue things because they are seeing the same thing. Even though we had a good inflation print just this week we saw Kevin Warsch, the new chair of the Federal Reserve said that the Fed has zero tolerance for inflation.
And so even though they got one good print, they also see what’s going on here and that the underlying inflationary pressure that we have in the economy has not gone away. Some would argue it’s getting worse. We have to see we don’t really know if it’s getting worse, but the pressure has not gone away. And so most people still think that a rate hike is on the table and is more likely than a rate cut. So the inflation picture is keeping those rates up despite the good print we got today. Now that should kind of make sense. If you listen to this show, we talk about this stuff a lot. The second reason is one that people are not talking about is not really directly related to inflation or is it even connected to the housing market. It actually has to do with AI. I know everyone’s talking about AI.
I can’t go through a conversation without AI right now, but this is really true. AI is pushing up mortgage rates and maybe not in a way that you have noticed before, but all of these companies that are building these massive data centers, they are spending hundreds of billions of dollars per year on data centers. The way that they’re raising money for that, some of them are just using cash that they have, but many of them are raising money. They’re going out and finding investors to help them invest and build all this infrastructure. And the way that they do that, some is through stock issuance, but the other way is through bond issuance. Basically they put out corporate bonds. It’s similar to what the US does. We talk all the time on the show about treasuries. That’s a US government bond where the government raises money, they borrow money from investors and pay them back four and a half percent.
That’s the yield on a 10-year US treasury right now. Companies can do the same thing. They can issue bonds and basically take out a loan from investors and pay them back over time. And this happens all the time. There are always corporate bonds, but the scal of how much AI companies are raising through bonds not really something that we’ve seen before. In the first half of the year in 2026, the first half of the year alone, these six hyperscalers, these are companies like Microsoft and OpenAI and Anthropic and these big companies that are investing heavily, heavily, heavily into data centers, they raised $244 billion alone, six companies in half a year, a quarter of a trillion dollars. That actually takes AI companies from 1% of investment grade bonds, corporate bonds to roughly 18%. That is a massive increase. In one month, July alone, Amazon put out $25 billion in bonds.
And I know with these companies, billions, hundreds of billions, trillions, the numbers start to sound benign, but these are huge, huge numbers and it matters. And the reason it matters, the reason you should care about this is because all of this borrowing, it competes with US treasuries. There is a limited pool of capital that people are willing to lend in the form of bonds. And yes, the US government is considered the safest bond. It is where most of the money in the world goes to in terms of bonds, but corporate debt tends to pay a higher yield. It’s a little bit riskier than the US government. It is much riskier than the US government, so it pays a higher yield. And right now, investor appetite for that risk and for those higher yields is high. People want it. People are absorbing it. Just in July alone through July 8th, in eight days, the bond market took down $32 billion of new AI bonds.
And the way that this impacts mortgage rates, the mechanism is that when people are putting their money, when these big institutions are putting their money into AI bonds and debt instead of US government debt, that means there’s lower demand for US government debt, lower demand for treasuries. When there is lower demand for treasuries, the yields go up because the government has to pay a higher interest rate to compete against these AI bonds. And as we’ve talked about, that yield on US treasuries is vitally important to mortgage rates. It is one of two variables. It’s the 10-year US treasury and it’s the spread on treasuries. And right now, although it’s not completely changing the mortgage market, it is putting upward pressure on mortgage rates. And so that is why if you combine these two things, both the war in Iran spike again, and all of this insatiable need for money to go into the AI infrastructure building, which I have a lot of questions about, but that’s a topic for another episode.
Those two things combined are pushing up mortgage rates. And unfortunately for us in the housing market, it’s probably going to stay like this for a while. It’s why I’ve said mortgage rates are not going down. I did not expect them to go back up to six and a quarter, but I’ve said they were going to remain in the mid sixes and that is generally correct. Hopefully they don’t go up anymore, but we’re just going to have to wait and see. And this is going too way on the housing market. Luckily, mortgage rates were about this high last year. So this isn’t unprecedented and it’s not like we’re in some crazy era where people in the last few years haven’t seen mortgage rates this high. They definitely have, and people are just adjusting to it, which is good. But if you were hoping for some mortgage late relief, this is just another step back.
Kind of feels like we take one step forward, two steps back, and today it kind of feels like that. We had a good inflation print, but the inflationary pressure is getting worse again and this AI competition is a new variable that is impacting mortgage rates. And so this is what we’re going to have for the foreseeable future. We’re still in the great stall. Nothing really changes about that, but I do hear a lot of people on social media in the media saying mortgage rates are going to get better. I wouldn’t count on it. Maybe they’ll come back down a little bit, but we’re not getting to low sixes anytime soon in my opinion, maybe even not by the end of the year. So buckle in for this. It doesn’t mean the market’s going to collapse. We’re seeing higher demand. Just remember that. People are still buying homes more than they were last year.
It’s not great. It’s still a slow, sluggish market. So for right now, it’s probably not going to change things fundamentally for the worst, but if affordability does continue to erode either from mortgage rates, prices going higher, wages going down, unemployment going up, that will impact the housing market, but that’s not happening right now. So right now what you need to know, rates are up and they’re probably staying relatively high for the foreseeable future. Not the best news, but stuff you need to know. So let’s move on. We have two more stories about the new housing bill that did get enacted into law and some stress in the credit market you should be paying atention to. Got to take a quick break though. We’ll be right back.
Welcome back to On the Market. I’m Dave Meyer. Today going over a lot of economic news we are getting in mid-July. Our second story here today is about the new housing bill, the 21st Century Road to Housing Act. It actually took effect this past Saturday. There’s a lot of drama about this. It passed both chambers of Congress a couple of weeks ago. President Trump refused to sign it, but there’s actually this parliamentary rule where if the Senate sends over their finished bill to the president and the president doesn’t do anything for 10 days, it actually just goes into the law. And President Trump didn’t do anything. He didn’t officially veto it. He just didn’t sign it because he was hoping to attach this to a voter registration bill that he’s been pushing for. But instead of vetoing it, he just sort of did nothing and we got the Road to Housing Act, one of the first big bipartisan bills I can remember in recent history.
And I’ve talked about this a lot. You can go back and check out other episodes where I go into a lot of the provisions and details. There are dozens of them. There’s a lot in there. But big picture, I’m a fan of the bill. It’s not a silver bullet. I think it does good stuff. I think the spirit of the bill is what I like about it is because instead of just trying to stimulate demand by offering down payment assistance or trying to lower mortgage rates somehow through portable mortgages or 50-year mortgages or stuff that you know I am not a fan of, it targets the main issue, which is supply side. There are some demand side things in there and I’m not against demand side solutions. I think there can be a bandaid for the low affordability that we have. But to fix the long-term stuff, which is what we should all be hoping for, you need to go after the supply side.
And I like that this bill targets it. It’s not going to fix everything overnight. It’s at a federal level, which is a problem in itself because most housing policy happens at a state and local level. And although this bill does encourage local governments to be better about allowing development and revitalizing housing, they don’t have to do it. There’s no requirement in there. But today I want to talk about one part of the bill because this is making a lot of news. It’s making all the headlines. Ben on a couple of news programs recently and it’s all anyone wants to talk about, which is the Wall Street part of it. Is Wall Street actually getting banned from the housing market? Let’s dig into it. Now the section in the bill, it’s kind of funny. If you look at the bill, the section about Wall Street is literally titled Homes Are For People Not Corporations.
So that makes you feel like, oh man, they’re getting Wall Street completely out of the housing market. That’s not exactly what’s going on here. So let’s talk about what’s actually in the bill. The big headline is that it bars institutional investors, which they define as organizations that own 350 or more homes. No really sure where they came up with that number, 350, but that’s where they came up with 350 or more homes from buying single family houses on the open market. So that’s a thing. It does actually stop you from buying single family houses on the market and there’s some teeth to it. There are real penalties. The penalties for doing it could be up to a million dollars or three times the price of the home. It also opens the door if states want to pass stricter bans, but there is a little bit of teeth to that.
There are a lot of exceptions that I think it’s not really going to stop institutional ownership. Big landlords, people like Invitation Homes, Tricon, Predium, they could still buy rental homes under a few conditions. So there are two big exceptions. One, if they make renovations, which is kind of what they do. They don’t really go out and buy that many turnkey homes. Sometimes they do. They were during COVID, but if they buy something and fix it up, they’re still allowed to do it. Or if they give tenants a chance to buy the home and do sort of a rent-to-own kind of model, they can do that. So that’s one carve out. Another carve out is they can still sell and buy homes from each other. I don’t know how much that really happens, but that is still possible. And one of the bigger ones is they can still buy build-to-rent product.
So if a developer goes out and carves something out as build to rent, those big institutional players can still buy it. So I would say, is this a ban on institutional buyers? No, definitely not. It’s kind of just like setting some rules and guidelines about what parts of the housing market institutional owners can play in. As some context, I just kind of want to remind everyone that I personally do not think that Wall Street is the problem in the housing market. I’m not saying I love that they participate in the housing market. If they got banned, I wouldn’t really care personally. Doesn’t really matter to me that much. I am not some huge fan of giant corporations owning rentals. I would rather mom and pop investors like you and me own that. Small entrepreneurship, small businesses, people pursuing financial freedom. I would prefer that. But I just kind of want to be honest that big firms own about 3% of single family rentals.
The BiggerPockets community may own more rentals than all of Wall Street combined. I don’t really know, but we have 3.5 million people in the BiggerPockets community. 90% of rentals are owned by people with 10 units or fewer. So it is kind of possible. It’s interesting. Anyway, I think that institutional buying panic, it’s just kind of overblown, but this will have some effects. What’s happening recently is that institutional investors have slowed down waiting to see what these provisions are. We’ve seen a lot of big institutions basically stop buying. Some of them were actually laying off employees on this. And so even though I think just to be candid, what’s in this bill is a little bit more political pandering. Again, it’s by both sides, it’s bipartisan bill. They want to say, “Hey, we got Wall Street out of housing.” Not really. I don’t really think they did.
It just kind of reshapes how these institutions are going to go about participating in the real estate market. They’re moving them more towards build to rent and for renovating, which is fine in my opinion. I think build to rent has an important part in the housing market. I think it could actually add supply. If developers are encouraged to create build for rent, that could create more rental supply and improve affordability. But I think the thing for us is that for small and mid-sized investors, there’s this pullback that’s going on right now and it might not last in institutional buying. It could be a window. There’s less competition right now in the resale and open market for the next year or two when they’re trying to figure out what to do, where to allocate capital. These are big institutions. And although they’re not like the government in how slow they move, they’re probably still going to take some time to figure out what the next play is.
And in a buyer’s market like we’re in right now, that reduced competition does create an opportunity for small and mid-sized investors. So if you’re in one of those markets in the Southeast where they had been buying, this is a time to look, time to go find opportunity. Could they come back? Yeah. And so I think this is kind of a window that you should look at if you’re in Florida or Tennessee or South Carolina or Phoenix, Texas. A lot of the Sunbelt basically where these institutions are super active, this might be your window right now to out – compete them and get great assets at good prices because we’re in a buyer’s market. A lot of those markets are in a correction. You’re going to have lower competition. That’s a good time to buy. Still got to buy smart and do everything we talk about, but I think that’s the headline here is that they’re going to probably pause and you can keep going.
So that’s my advice on the housing bill. We’re going to have to see everything else, but that’s kind of the near term thing that I think could benefit small and mid-sized investors like all of us. So that’s our second story. We have one more about cracks in consumer credit, and I’ll of course share why you should care about this. We got to take one more break though. We’ll be right back.
Welcome back to On the Market. I’m Dave Meyer. Today going through three big stories that are impacting the housing market. We talked about mortgage rates and why they’ve gone up in recent days. Just talked about the housing bill and the impacts on institutional investors. Next, we’re going to talk about cracks in consumer credit. We spent a lot of time on the show talking about housing credit, what’s going on with mortgages and that delinquencies are still doing fine, that the foreclosure hysteria on social media is really overblown. Today though, I want to look outside housing and talk about credit cards and student loans because that’s where the stress is and it can come back into real estate in some direct ways that I’m going to talk about. So big picture here, total household debt, just what Americans are taking out, not corporations or the government, but household debt keeps going up, hit almost $19 trillion in Q1 of 2026.
Of that, credit cards are actually kind of small in terms of total consumer debt. It’s 1.25 trillion. It’s still an enormous amount of money, but when we’re talking about 19 trillion in consumer debt, most of that is mortgages. The vast majority is mortgages. Credit cards, 1.25 trillion. Student loans, 1.7. Auto loans, 1.7 as well. Overall, delinquency rates aren’t terrible, but they’re not great. They’re at 5%, 4.8%. It’s not a crisis, anything like that we would know. And actually what we’re seeing is in a lot of these things, I keep updating you guys because I do think this is an important part of the economy to watch. Usually what happens to drive us into a recession is there’s credit default. That’s kind of the thing that tips us over the edge.Maybe the economy runs too hot, people spend too much money, they take out too much debt.
That is usually what happens. And then when delinquencies start to rise, that’s when the economy resets through a recession. And so that’s why we look at this stuff. We know mortgage rates are doing okay, but I’ve shared with you in recent months that things like student loan delinquencies, auto delinquencies, credit card delinquencies have been going up. And so even though that total number is not in crisis levels, the trajectory recently hasn’t been great. Now there is some good signs around the credit card front. It’s basically flattened out. It’s still relatively high. We’re still at about 8.6%. It’s not terrible. Serious delinquency flows on credit cards, basically flat. It’s up, but it’s not in the panic session. And the fact that it’s flattening out is a good sign. So with credit card stuff, still something to watch, but I’m not super concerned about that right now.
Obviously I don’t want people delinquent on their credit cards. That stinks. But in terms of how it plays into the housing market, I don’t think it’s going to be that bad. If you look at where the delinquencies are in credit cards, it’s really with subprime borrowers. There are not a lot of subprime borrowers in the housing market anymore. A lot of regulations since the financial crisis got that segment of the market out. So I don’t think this has an immediate spillover. Could spill over into the rental market. It’s kind of extrapolation at this point. I’m not that worried about it. But student loan delinquencies is a real factor in the housing market. If you see the number, the percentage of student loan balances that are seriously delinquent, 90 plus days delinquent, it’s up above 10%, 10.3%. It’s actually up from 9.6% the prior quarter. So that’s going up at a pretty decent rate.
That’s not great. And just the scale of number of people is a lot. The number of people who are more than 120 days past due is 2.6 million. That is a lot of people, right? Now there is some good news here. The rate at which it’s increasing is going down a little bit. So it’s not like going exponential. It’s kind of starting to level off a little bit, but the level is high. So we need to pay attention to it. Since this pandemic pause was fully over, we kind of knew student loan repayments were probably going to hit the market a little bit and we’re starting to see exactly how. So first and foremost, it’s just people don’t have a lot of money. It’s getting spread out and it’s not going to housing. So actually NAR, they just did a survey asking what the biggest challenges are to buying a home and saving for a down payment.
And the number one obstacle by far was student loans. 43% of first time home buyers say that student loans are their number one obstacle to saving for a down payment. That’s crazy. The average federal student loan payment right now is about $382 a month. That’s a lot, right? Because if you actually extrapolate that, Zanda actually did a study on this, they show that in certain states that can delay what you need for down payment by up to seven years. If you’re paying full price, I think it’s about like 18, 19 grand of affordability that it knocks off. And if you’re an investor, you buy a lot, maybe 19 grand doesn’t sound like a lot, but in certain markets, it knocks you down to being able to afford about under a $300,000 home. It’s possible in some markets, some markets that’s not possible. So this is one of the reasons why we see the age of first-time home buyers keep getting pushed later and later.
It sort of softens demand for first time home buyers. So that is two things that you need to know there. One, it’s going to lower demand for entry level flips or resale, something important to know, but it could be a tailwind for rental demand. Now I’m not happy about this. I’m just saying, I just want to make clear, I wish more people could afford primary residences. I really do. I think that’s important for society. I even think it’s good for investors. I think if there’s that demand, that is good. But in the trade-off here, and there’s always trade-offs in the market, is that more of these people will be renting. So single-family rentals might get an actual benefit in terms of rents and occupancy because of this. So two things you need to know. So that’s the first reason. The second reason that demand is coming down, just not even the saving part is the qualification part because student loan payment resumption, it dings credit scores.
It adds to your debt to income ratio. So even buyers who might have saved up or who want to get in are having a harder time getting approved. And so this is just another reason to extrapolate what I said before. Another reason we’re going to see low demand for entry level homes. So be careful on the resale if you’re trying to flip those kinds of things and why single family rentals might actually get a boost in terms of occupancy and rent because of these two things. Saving for a down payment and qualifying are hitting the same group hard. So big picture with credit, remember housing credit is fine, but these things do spill over. People only have so much money. If they’re delinquent on their credit cards or their student loans, it impacts housing demand and it impacts rental demand both in positive and negative ways.
If you’re renting to folks in the subprime category who are credit card delinquent, you might see lower demand for housing. You might see non-payment of rent go up because people are stretched. They have to consider where to put their money. Meanwhile, people who are in that kind of gray area where they’re trying to save for a down payment but can’t be qualified or they can’t save up, rental demand in that category might go up. So these are things that you should think about in your own decision making about where demand’s going to be, about what properties to buy and to hold and to renovate. These are trends that I think are going to be here for a little while. I don’t think we’re all of a sudden, although things are getting better, I don’t think affordability for first time home buyers is getting better anytime soon.
So these are things that you can use to make decisions in your own portfolio. It’s something I definitely think about in the things that I am buying and the things that I am selling. So that’s it. That’s our headline for today. Rates are up. They’re probably going to stay higher. The housing bill finally passed. I encourage you to go back and listen to the episode, use Claude to analyze the bill and see where there are provisions that might benefit or hurt you in your portfolio. It’s mostly benefit, I think, but go in and check what opportunities you can take from that. And then third, look at credit stress. Look at who your tenants are, look at your own portfolio and how stress outside the housing market may be seeping into your portfolio because it’s happening and it’s not obvious, but investors who are going to thrive and do well in this environment are the people who are paying atention to this stuff that’s not just immediately in front of your face, that’s not just the headlines about housing.
This stuff matters. It does impact the housing market and hopefully today’s episode helps you understand how. I’m Dave Meyer. Thank you so much for watching this episode of On the Market. I’ll see you all next time.