Motley Fool Money – "The Mortgage Market Gets its Groove Back"

Date: September 11, 2025
Host: Tyler Crowe
Guests: Matt Frankel, John Quast

Episode Overview

This episode dives deep into the U.S. mortgage market’s sudden resurgence after a period of stagnation, the shockwaves from Oracle’s historic earnings report (and its implications for AI and tech investing), and a significant ETF milestone for investors. The team shares actionable insights on stocks and ETFs to watch, all while maintaining the show’s signature sharp, conversational tone.

Key Discussion Points & Insights

1. Mortgage Market Revival

(00:00–06:32)

• Context:
  U.S. mortgage rates, as reported by the Mortgage Bankers Association, have dropped to 6.49% — a 20-basis point decline that’s triggered a serious uptick in demand for refinancing and new loans.

• Data Highlights:

  • Refinancing activity: Up 34% year-over-year, 12% week-over-week.
  • New loans: Up 23% year-over-year, 7% week-over-week.
  • Drivers:
    • Declining rates for refis
    • Increased home inventory for new loans
    • Rising home prices, giving owners more equity to tap (Matt Frankel, 01:21)

• Potential for Further Rate Cuts:

  • Recent data: Downward revisions in jobs report and a drop in August Producer Price Index signal possible deflation and build the case for more Fed rate cuts.
  • Mortgages & Fed: Mortgage rates don’t exactly track Fed rates but “kind of rhyme” with them. (Tyler Crowe, 02:21)
  • Forecast:

    “Right now, basically the data is catching up to the reality... It does indeed look like rates are going to come down. By extension, it seems like mortgage rates are going to decline significantly as well.”
    — John Quast (03:02)

2. Housing-Related Stocks to Watch

(04:07–06:32)

• Rocket Companies (RKT):

  • Boomed during 2020–2021 refi surge; survived industry shakeout.
  • Recent acquisition of Redfin could serve as a major marketing and growth funnel.

  “Rocket just acquired Redfin, which... is stronger as a part of Rocket. It could serve as a great marketing funnel for both purchasing and refinancing loans.”
  — Matt Frankel (04:33)

• Upstart (UPST):

  • Noted for explosive growth in HELOC originations (+800% YoY for Q2 2025).
  • Poised for tailwinds as home demand rises and rates fall.

  “This might be one to watch here as macroeconomic conditions improve.”
  — John Quast (05:21)

3. Oracle’s Blockbuster Quarter & AI Implications

(07:45–14:55)

• Market Reaction:
  • Oracle stock surged ~40% after Q1 2026 earnings — its best day since 1992, adding $250 billion in market cap.
• Focus on Backlog (“Remaining Performance Obligations”):
  • Backlog up 359% to $455 billion. (John Quast, 08:28)
  • Short-term deferred revenue = $12.1 billion (+29% YoY), indicating much of the backlog is “over a year away.”

  “It leads me to believe my portfolio is not nearly enough exposed to AI infrastructure growth if these numbers are even remotely correct.”
  — John Quast (08:28)

• Profitability Concerns:
  • Despite the backlog, GAAP earnings per share declined YoY, largely due to infrastructure investment (data centers, etc.).

  “Profit growth could be somewhat of a delayed fuse because of the increased spending. How delayed remains to be seen.”
  — Matt Frankel (10:58)

  • The cloud infrastructure revenue is projected for non-linear, explosive growth over the next four years.

Notable Moment

“Assuming that holds, this will have been Oracle's best day since 1992. Not even during the dot com bubble did this happen...”
— Matt Frankel (10:58)

Wealth Effect — Larry Ellison

“Oracle co-founder Larry Ellison saw his personal wealth grow by about $115 billion with this one stock move.”
— Tyler Crowe (12:12)

• Related Stocks Benefiting from the AI Boom:
  • Seagate Technology (STX): Leading S&P 500 performer in 2025, critical data storage provider for data centers – “boring but essential” play on AI infrastructure (John Quast, 12:58).
  • AMD (Advanced Micro Devices): A “consistently underestimated” chipmaker, major share gainer from Intel, key supplier to data centers and AI applications. (Matt Frankel, 13:57)

4. ETF Industry Milestones and Investment Discussion

(15:00–20:24)

• Historic Milestone:

  • ETFs now outnumber individual stocks listed on U.S. exchanges. Also, in the past year, passive ETF assets under management surpassed those in active mutual funds for the first time.

• Benefits and Potential Pitfalls:

  • Shift from high-fee mutual funds to low-cost ETFs is broadly positive for the average investor.

  “Low-cost ETFs generally can provide better returns. Fees are coming lower. So investors, pat yourself on the back. You're paying attention to something that matters here.”
  — John Quast (16:33)

  • Crowding and duplication among ETFs could become a problem in the future.

  “At some point I have to think there might be too many ETFs... There’s only room for but so many.”
  — Matt Frankel (17:39)

5. ETFs on the Radar

(18:49–20:24)

• Defiance Quantum ETF (QTUM):

  • A smart choice to gain diversified exposure to quantum computing; expense ratio 0.4%.

  “I think an ETF can make a lot of sense when there is a big trend that you believe in, but you don't really have the skills to pick an individual winner.”
  — John Quast (18:49)

• Vanguard Russell 2000 ETF (VTWO):

  • Emphasizes small cap stocks, which “are likely to be disproportionately benefited by falling interest rates” given the wide large/small cap valuation gap.

  “You’re not going to double your money overnight, but small caps are likely to be disproportionately benefited by falling interest rates...so it’s one that I’ve been loading up on lately.”
  — Matt Frankel (19:41)

Notable Quotes & Memorable Moments

• “The data is catching up to the reality and the policymakers are going to have to make some decisions based on that better data.”
  — John Quast (03:02)

• “Rocket just acquired Redfin...It could serve as a great marketing funnel for both purchasing and refinancing loans.”
  — Matt Frankel (04:33)

• “It leads me to believe my portfolio is not nearly enough exposed to AI infrastructure growth if these numbers are even remotely correct.”
  — John Quast (08:28)

• “Profit growth could be somewhat of a delayed fuse because of the increased spending. How delayed remains to be seen.”
  — Matt Frankel (10:58)

• “Kudos to Larry Ellison. First of all, I'm not even sure Elon Musk has had a $115 billion day at any point. That’s got to be some kind of record.”
  — Matt Frankel (13:57)

• “Low-cost ETFs generally can provide better returns... Investors, pat yourself on the back.”
  — John Quast (16:33)

Timestamps for Key Segments

• 00:00–04:07 — Mortgage rates drop and market reaction
• 04:07–06:32 — Stock picks in a warming housing market
• 07:45–14:55 — Oracle’s earnings, backlog explosion, and AI infrastructure plays
• 15:00–18:49 — ETF milestone and debate
• 18:49–20:24 — ETFs to watch

Conclusion

The episode explores the domino effect of declining mortgage rates on homeowner activity, the far-ranging impacts of Oracle's AI-driven growth, and what these mean for savvy investors. The hosts bring practical stock and ETF recommendations, underscoring the need for adaptability in today’s rapidly changing markets. Listeners are left with a clear sense of where opportunities — and caution — may lie in both traditional and emerging areas of the market.