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Average mortgage rates today

Mortgage Type
Label
Rate
APR

30-Year Fixed
Most Popular
6.63%
6.67%

30-Year FHA
Lower Credit
6.13%
7.34%

30-Year VA
Military
6.2%
6.37%

30-Year Jumbo
High Balance
6.75%
6.77%

15-Year Fixed
Shorter Term
5.95%
6.02%

7/6 ARM
Shorter Term
6.3%
6.37%

HELOC
Home Equity
8.09%
8.09%

Home Equity Loan
Home Equity
8.14%
8.14%

Updated on 09/03/2026

Rate data provided by RateUpdate.com. Displayed by Mortgage Research Center, LLC, NMLS# 1907, Equal Housing Opportunity, Payments do not include taxes or insurance premiums. Actual payments will be greater with taxes and insurance included. Rate and Product details

Mortgage rates decreased to 6.67% after concerns over a potential interest rate hike at the next Federal Reserve meeting eased. Rates remain elevated despite the decline, keeping many would-be buyers on the sidelines.
Key mortgage rate averages:

The 30-year fixed-rate mortgage averaged 6.67% APR
The 30-year fixed-rate FHA mortgage averaged 7.34% APR
The 30-year fixed-rate VA mortgage averaged 6.37% APR
The 30-year fixed-rate jumbo mortgage averaged 6.77% APR
The 15-year fixed-rate mortgage averaged 6.02% APR
The 7/6 adjustable-rate mortgage averaged 6.37% APR
The rate on a HELOC averaged 8.09% APR
The rate on a home equity loan averaged 8.14% APR

Mortgage rate trends
Mortgage rates ticked higher over the past few days as the probability of a Federal Reserve rate hike increased and inflation remained stubbornly high. Rates are likely to stay in the mid-6% range for now, although they could move a little higher.
The next set of data that could influence rates will be released on Friday, when the Bureau of Labor Statistics publishes the non-farm payroll and unemployment numbers for August. Signs of weakness in the jobs market could cause rates to decrease, although the decline is likely to be relatively small.
Which loan is best for you?
When shopping for a mortgage, you may be offered several loan options that will fulfill different needs. Here’s a rundown of the most common loan types you’ll find, and who they work best for.
30-year conventional mortgage: Conventional loans work best for borrowers who have a credit score above 620, have saved enough to make a down payment of at least 3% and are looking for flexibility in the type of property being purchased.
30-year Federal Housing Administration (FHA) mortgage: FHA loans are good for first-time homebuyers, borrowers with less-than-perfect credit scores or those with a high debt-to-income ratio.
30-year U.S. Department of Veterans Affairs (VA) loan: Specifically designed for active-duty and retired service members, members of the National Guard and Reserves, and surviving spouses. Offers 0% down loan options, competitive rates and accepts less-than-perfect credit scores.
30-year jumbo loan: Good for homebuyers purchasing property that is priced above the Federal Housing Finance Agency (FHFA) conforming loan limit. In 2026, that limit is $832,750 in most of the U.S. but increases to $1,249,125 in high-cost areas.
15-year fixed-rate loan: Borrowers who prefer a shorter loan term and can afford to make higher monthly payments will pay less overall interest with a 15-year mortgage and pay off the loan faster.
7/6 adjustable rate loan: Good for a buyer who wants to lock in a favorable interest rate for a set period of time and either plans on selling the home before the interest rate starts, is willing to make a higher monthly payment once the rate becomes variable or is open to refinancing the loan.
Home equity line of credit (HELOC): A good option for a homeowner who wants to access the equity they’ve accumulated in their home and have an open line of credit to use as needed.
Home equity loan: Another option for a homeowner who wants to access their home equity and have the financial capacity to take on a second mortgage.

How mortgage rates affect affordability
The rate on your mortgage can make a big difference in how much home you can afford and the size of your monthly payments. That’s true whether buying your primary residence, an investment property or refinancing an existing loan.
Here’s an example. If you bought a $250,000 home and made a 20% down payment of $50,000, you would end up with a starting loan balance of $200,000. On a $200,000 home loan with a fixed rate for 30 years, here’s what you would pay:

At a 3% interest rate = $843 in monthly payments (not including taxes, insurance, or HOA fees)
At a 4% interest rate = $955 in monthly payments (not including taxes, insurance, or HOA fees)
At a 6% interest rate = $1,199 in monthly payment (not including taxes, insurance, or HOA fees)
At an 8% interest rate = $1,468 in monthly payment (not including taxes, insurance, or HOA fees)

Experimenting with a mortgage calculator allows you to find out how much a lower rate or other changes could impact what you pay. A home affordability calculator can also estimate the maximum loan amount you may qualify for based on your income, debt-to-income ratio, mortgage interest rate and other variables. The Consumer Financial Protection Bureau can also provide a range of rates offered by lenders in each state.

Current mortgage rates FAQs
What is a 30-year mortgage rate right now?
The average rate on a 30-year fixed-rate mortgage is 6.73% as of September 2, according to Money’s rate data. Other rate surveys show 30-year rates averaging close to 6.8%.
Can you get a 4% mortgage rate?
No, not under current market conditions. A 30-year fixed-rate loan is averaging in the mid-to-6% range as of September 2.
Will we ever see a 3% mortgage rate again?
Mortgage rates are unlikely to fall below 3% in the near term unless a severe economic downturn occurs. However, rates averaged in the mid-3% range before the pandemic, so a return to that range at some point in the future is not out of the question.
How much is a $300,000 mortgage at 7%?
The monthly payment on a 30-year, $300,000 conventional mortgage at 7% is $1,995.91, excluding taxes, insurance and HOA fees. Your actual payment will vary depending on your credit score, down payment, lender and location, among other factors.

Buying an S&P 500 index fund can feel like a straightforward way to diversify. After all, many American workers dollar-cost average into this sort of fund with every paycheck via a 401(k) or IRA without even thinking about it.

Steve Sosnick, chief strategist at Interactive Brokers, argues that investors should look more closely before assuming that broad-market exposure offers enough diversification to offset a portfolio weighed down by technology holdings trading near all-time highs.

In his view, an S&P 500 fund or a similar broad-market index fund can leave an investor exposed to the AI trade by about 40% to 45%. Adding individual AI-related stocks or semiconductor names on top can concentrate a portfolio far more than its owner realizes.

Why is the S&P 500 so AI-heavy right now?

This silent-but-potentially-risky overweighting occurs because the S&P 500 — and the popular index funds that track it — are weighted by market capitalization, which means larger companies (by market value) make up more of the index.

In fact, as of early September, the top seven S&P 500 companies made up over 34% of the index’s value. What do they all have in common? They’re all heavily involved in the AI boom:

Nvidia: (NVDA)

Microsoft: (MSFT)

Apple: (AAPL)

Amazon: (AMZN)

Meta Platforms: (META)

Broadcom: (AVGO)

Alphabet Class A: (GOOGL)

Alphabet Class C: (GOOG)

That does not mean an S&P 500 fund is inherently unsuitable, nor does it mean technology cannot keep rising. Sosnick’s point is narrower and more practical: Investors should measure the overlap between a broad index fund and their other holdings, then decide whether that combined exposure fits their risk tolerance, especially while long-term bond yields are rising.

The immediate takeaway, according to Sosnick, is to review positions by their shared economic exposure rather than by the number of ticker symbols in the account.

The distinction matters because a successful buy-the-dip strategy can also become a habit that ignores changes in business fundamentals, valuation, and financing conditions. Sosnick sees signs that those conditions deserve more attention now.

Also read: Dow Jones vs. S&P 500: Which index actually represents the market?

Why an S&P 500 fund can overlap with AI stocks

Diversification means spreading risk across investments that do not all depend on the same outcome. A portfolio can look diversified on paper because it owns an index fund, individual stocks, and perhaps a sector fund. It may still be making one large bet if many of those holdings depend on continued enthusiasm for AI spending, semiconductor demand, or the largest technology companies.

Sosnick’s concern begins with market capitalization weighting, the approach used by many S&P 500 index funds. In a market-cap-weighted fund, the largest companies receive the largest allocations. That structure can be useful for investors seeking broad index exposure, but it also means that large technology companies can have an outsized influence on the fund’s returns.

“Even if you’re putting money into an S&P 500 mutual fund or index fund, which is pretty generic, whether you’re doing ETFs or mutual funds, et cetera, you’re about 40% or 45% exposed to the AI trade.”

—Steve Sosnick, when asked whether taking risk off the table means rotating out of big technology stocks

Sosnick’s estimate is a warning about portfolio construction, not a forecast for the next market move. An investor who owns a broad S&P 500 fund, NVIDIA, Micron Technology, and a semiconductor-focused leveraged ETF may own several different securities, but each can be sensitive to a reversal in the same AI trade.

The correct question is not simply whether each holding has performed well. It is whether all of them could decline for the same reason.

If you just own an S&P index fund, “you’re about 40% or 45% exposed to the AI trade,” says Sosnick. TheStreet

How rising long-term bond yields pressure stock valuations

The second part of Sosnick’s caution is interest rates. Long-term bond yields are the returns investors can receive from lending money over longer periods. When those yields rise, investors either demand a higher expected return from stocks, or reduce exposure to stocks altogether. That can pressure stock valuations, particularly for companies whose expected cash flows lie further in the future.

Sosnick describes the basic valuation logic in plain terms: A stock can be viewed as the present value of its future cash flows or earnings. A higher interest rate reduces that present value because future dollars are discounted more heavily.

The mechanism does not determine the price of every stock on every day, but it explains why a sustained rise in long-term rates can be difficult for richly valued growth stocks.

“When long rates go up, that pressures valuations, if you’re actually thinking fundamentally. A stock in theory is the present value of its future cash flows or earnings, depending on how you wanna do the model. But the higher the interest rate, the lower the present value, the more you have to discount those future earnings.”

—Steve Sosnick, when asked what being nimble in the current market looks like

Sosnick pointed to the 10-year Treasury yield near 5% and the 30-year yield above 5% as important market thresholds. He said investors may have to rethink assumptions if the 10-year moves through 5%, because fundamental valuation models would need to be reconsidered in a more persistently high-rate environment. He did not say that a move through that level guarantees a selloff, and he also noted that it is possible that bond traders could halt at that level.

For a long-term, buy-and-hold investor, the useful takeaway is not to attempt to predict every shift in bond yields. It is to recognize that an investment portfolio heavily tilted toward the AI trade may have two related vulnerabilities: a technology disappointment and a higher discount rate applied to future earnings. Reviewing those exposures together is more useful than treating them as separate risks.

Related: S&P 500 investors are quietly making a huge shift

How to tell differentiate a buyable dip from a deteriorating business

Sosnick does not reject buying dips. He says Interactive Brokers customers have often been successful with the approach over the past 10 to 15 years. His warning is that a strategy with a long record of working can become reflexive. A price decline is not, by itself, evidence that a stock has become a bargain.

The first test is whether the business fundamentals have changed markedly. Fundamentals are the conditions that support a company’s business, such as its earnings outlook, competitive position, and ability to generate cash.

If a stock falls because of a short-lived bout of market nervousness while the underlying business remains sound, Sosnick sees a potential opportunity. If the business outlook has worsened, on the other hand, the lower price may reflect a legitimate reason for investors to sell.

“From a longer-term point of view, I think you want to look at situations where the market might really dislike something, but the fundamentals still remain solid. On the other hand, if those fundamentals appear to have changed, that’s not a buying opportunity. There’s a reason why people are selling.”

—Steve Sosnick, when asked how investors can distinguish a buying opportunity from a dip to avoid

His Salesforce example illustrates the difference between changing sentiment and a broken business. Sosnick said investors moved from loving Salesforce (and software as a service at large) to hating them, while neither extreme sentiment necessarily described Salesforce — as a company — accurately.

He also cited Microsoft, where investors focused on companies receiving Microsoft’s spending, including semiconductor businesses, rather than on why Microsoft was making the investment. A stock can fall out of favor without its core business becoming worse.

Timing still matters. Sosnick said a trader may act quickly during a short-term dislocation, while a longer selloff can require waiting for the dust to settle. That is an argument for matching an action to an investor’s time horizon. A short-term trader should use a pre-defined plan (including an exit strategy, like a stop-loss order) for a temporary price move. A long-term, buy-and-hold investor needs a clearer view of whether the company’s business case remains intact.

Why having an exit plan matters before buying a stock

Sosnick separates a trade from an investment because each requires a different time frame, even if both involve the same stock. He recalled a friend who bought a stock, watched it rise, and then asked when to sell. Sosnick’s first question was the price target. The friend had not set one.

For investors using trading-style tactics, Sosnick recommends defining a buy level and a sell level before opening a position. He also recommends setting a stop level, a preplanned price at which an investor exits to limit their loss. The maximum acceptable loss belongs to the exit decision: It defines the loss an investor is prepared to accept before selling the position.

Related: Bank of America takes heat for stark S&P 500 call 

A long-term, buy-and-hold investor may set wider limits and hold a position for a longer period than an active trader. Sosnick nevertheless argues that investors should keep monitoring investments rather than treating an original thesis as permanent. A preplanned process can prevent the common mistake of buying first and inventing the selling rules only after the price has moved.

This framework also helps explain the activity Sosnick sees among Interactive Brokers’ active customers. He said customers bought Nvidia before earnings and took profits after the stock moved higher. He said Microsoft appeared on the sell side after a 15% pop during the summer. In Sosnick’s view, those customers were treating many individual names as trades, while they treated VOO purchases during significant declines — such as the tariff tantrum and the aftermath of the start of the Iran War — more like investments.

Where value stocks can fit in a concentrated portfolio

Reducing overlap does not require abandoning stocks. Sosnick says investors may want to look beyond the most popular growth names and consider lower-beta companies. (Beta is a measure of how sensitive a stock tends to be to broad market moves, so a lower-beta stock has historically tended to move less than the market.)

He said value stocks have performed well relative to growth stocks over the past year or two, a trend he believes many investors have overlooked. He highlighted dividend-paying companies supported by free cash flow, meaning cash a company has left after running and investing in its business. His preference is for dividends that businesses can afford from that cash rather than dividends supported by borrowing.

Sosnick did not offer buy, sell, or hold recommendations on individual stocks. Instead, he suggested starting with sectors that tend to be more stable and value-oriented, including industrials, basic materials, and consumer staples. He was less favorable toward consumer discretionary companies as a starting point for this screen.

For valuation, he mentioned the PEG ratio, which compares a stock’s P/E ratio with its earnings growth rate. Sosnick said a value investor should not want to overpay for a company with a PEG ratio of one, and should avoid paying a huge premium to own companies whose P/E ratios exceed the market average.

It’s important to note, however, that these are just Sosnick’s screening ideas — not guarantees that a stock is cheap or will outperform.

The takeaway for S&P 500 investors with AI holdings

Sosnick’s market outlook is cautious. He said the S&P 500 may trend sideways to lower, and he called a 10% correction overdue, while declining to predict an immediate 20% bear market. That forecast is an opinion, and he also acknowledged the market’s powerful tendency to attract dip-buying after pullbacks.

The more durable decision procedure does not depend on accepting his forecast. First, list an S&P 500 fund alongside every individual stock and sector fund. Next, identify how much of the portfolio relies on the AI trade, semiconductors, and the largest technology companies. Then decide whether the combined exposure, including any leverage, is appropriate if rates remain elevated or the technology trade becomes more volatile.

Long-term, buy-and-hold investors can use that review to rebalance toward exposures they actually want, rather than assuming the total number of holdings in a broad-market fund equals diversification. Active traders can add defined buy levels, sell levels, and stop-loss levels before placing a trade.

In both cases, the discipline is the same: Distinguish a temporary decline from a change in the underlying business, and keep enough liquidity available for near-term needs.

All this being said, Sosnick still believes a broad index fund can remain a useful core holding. His warning is that an investor should understand the risks already inside that core before adding more of the same theme. When the S&P 500, individual technology holdings, semiconductors, and leveraged products all point toward the AI trade, even a generic-looking portfolio may be less diversified than it appears.

It is not an easy time to be in the travel booking industry; between the ease with which travelers can book their own trips online and a market in which many are watching their spending more carefully, the majority of travel agencies that have been able to find their market are in the luxury space selling curated trips to high-spending travelers.

The United Kingdom, which in past decades had tens of thousands of operating travel agencies due to a strong national travel culture and interest in package holidays, has in the last few years been feeling the shift in booking patterns particularly acutely.

Some of the British travel companies that ended up having to cease operations since the start of 2026 include Trav Expert, Groupia, Salamander Voyages, Travel Bespoke, Regen Central, Set Sail Cruises, Yourtravelshop.com, Ski Yodel, and TS Travels Group among others.

Wayfairer Travel tells customers trips are canceled ‘until further notice’

The latest name to join that list is luxury travel firm Wayfairer Travel. Launched out of Bristol in southwestern England in 2012, the travel agency sold luxury safari trips as well as other guided tours to destinations such as Machu Picchu and different regions of Japan.

The trip packages began at £4,500 ($6,000 USD) and could go up to tens of thousands of for curated small-group tours that included private transfers between countries and luxury accommodations.

Related: 40-year-old international travel and cruise company ends in bankruptcy, all trips off

This week, customers who booked travel with Wayfairer Travel received communication that all trips were canceled “until further notice.” In some cases, the trips that customers booked were scheduled to take off as early as later in the month and those who booked the trips are now left scrambling to get refunds or make alternative accommodations.

“We are truly sorry for the concern and uncertainty caused by the current situation,” a Wayfairer Travel spokesperson said in a statement to local news outlet The Independent. “Wayfairer Travel has currently suspended all services until further notice.”

The Association of Bonded Travel Organisers Trust (ABTOT) also put out a “do not travel” notice for anyone with a package holiday with the company.

Wayfairer Travel sold curated trips to places like Machu Picchu.Image source: Shutterstock

What to do if you have a trip booked with Wayfairer Travel, how to get a refund

While limited information on what caused the sudden shutdown is currently confirmed, the collapse is almost certainly financial. The ABTOT said that “Wayfairer cannot currently provide certainty that affected packages will be delivered.”

The company itself added that it is “unable to provide further information until we have received the appropriate accounting and legal advice.”

More Travel News:

Airline to launch unusual new flight to Cayman Islands from the U.S.

There is a very cool Irish version of swimming pigs in The Bahamas

Unexpected country is most luxurious travel destination for 2026

Low-cost airline launches easier way to get to Sri Lanka

The membership association and government consumer protection body instructed those whose holidays are booked after September 30 to not travel and await for further communication.

These travel agencies also filed for bankruptcy in 2026:

AVG Travels: The Melbourne-based travel agency selling cheap vacation packages to travelers in Australia and New Zealand sent more than 200 customers an email saying that the trips were canceled before entering bankruptcy in May 2026.

GoPlay Sports: In April 2026, the men’s basketball team of the University of Dallas was left without a planned trip to compete in the United Kingdom after Boston-based GoPlay Sports Tours LLC accepted two payments of $30,000 and then went unreachable.

Havantur: Havantur was forced to shut down its main European office in France at the start of 2026 after tourist numbers to the Caribbean country plummeted due to U.S. military actions in Venezuela and threats against the country.

Vegas Vacations and North America Destinations: Two travel agencies in the Canadian province of British Columbia, Vegas Vacations and North America Destinations, were shut down by regulators within a few days of each other in January 2026 after multiple travelers complained of buying trips and receiving invalid plane tickets and hotel bookings.

Those who received an ATOL Certificate, which in the United Kingdom is issued once customers make a deposit for a package holiday that includes a flight, can immediately file a claim directly with ABTOT.

Those without it, as well as customers outside the United Kingdom, are not protected by the agency and so have been advised to file for a refund with their credit card issuer.

“Because Wayfairer cannot currently provide certainty that affected packages will be delivered, ABTOT is putting arrangements in place to assist eligible UK customers,” ABTOT says in the rest of its statement.

Related: Another travel company shuts down and cancels all trips, refunds available

The Los Angeles Dodgers could soon see the son of one of their most famous former players in a division rivalry game.

AI is moving beyond chatbots. At IFA 2026, robots, smart binoculars and dive tech reveal how embodied AI is beginning to see, move and interact with reality.

Private credit fund investors face a growing risk that is hiding in plain sight—and now sometimes not in plain sight. Funds are increasingly adding interest payments back to loans in lieu of cash payments, potentially raising a red flag on an issuer’s ability to pay back its debt.Default risk is a challenge to properly assess in private credit. The price of public corporate bonds often reflects the market’s assessment of this risk. Private loans, however, don’t have an active market to infer a changing risk profile. Private market investors are forced to consider metrics other than price to ascertain a fund’s current level of default risk.Payment-in-kind isn’t a portfolio metric that appears on a fund’s factsheet or marketing materials. Investors must dig through each fund’s financial statements to pull it out. PIK exposure from a single point in time typically won’t reveal much, so expanding the data collection to peers and historical values quickly becomes prohibitive for investors.To bring greater transparency, Morningstar Direct Platform users can now screen for this PIK income across semiliquid funds, such as unlisted business development companies. While there are still aspects of PIK that are harder to discern, the ability to screen for PIK income is a major step forward in fund selection and oversight. Here, we start with PIK basics and go on to explain what those hard-to-discern aspects are, as well as identify some worrying PIK trends that investors should bear in mind. PIK BasicsPIK means that, instead of making cash interest payments, a debt instrument is structured to make those payments in the form of more debt. In essence, the borrower is skipping cash payments and instead racking up more debt in exchange for the privilege. This flexibility is a major draw of private credit over public credit, at least for the companies borrowing the money.How much of a portfolio is allocated to PIK debt has become especially important for direct lending funds, such as unlisted business development companies. That’s because the amount of PIK debt, and whether that figure has been changing, can be a cautionary signal. PIK increasingly aligns lenders with borrowers for good or ill. The lender doesn’t collect any cash and instead increases the face value of the loan within its portfolio; the hope is to eventually earn that cash when the loan matures or is refinanced at the new, higher loan balance.For the borrower, PIK is like skipping a credit card’s interest payment and adding it to the balance instead. The borrower pays nothing today but owes more tomorrow. For the lender, that larger lump sum means either a bigger future gain or loss, depending on whether the loan is paid back.Unpacking PIKNot all PIK is created equal. There are broadly two different ways that a loan ends up paying in-kind rather than in cash.The first is called upfront PIK. It occurs when a loan is structured from the start to allow for PIK. Lenders may be willing to lend on a PIK basis if the loan is financing a project that isn’t expected to generate any cash for a certain period, such as the building of a data center. A loan financing data center construction might accept PIK terms early on and then mandate a switch to cash payments when the project begins to generate cash or after some contractually specified length of time. Sometimes upfront PIK is structured to allow the borrower to “toggle” between cash and PIK rather than tying it to a specific length of time, thereby allowing the borrower to flip back and forth as the market and the business evolve. This kind of PIK is typically extended only to borrowers with comparatively strong financial footing, or when too many lenders are competing for too few deals, giving borrowers the upper hand in negotiations.The second way is when a lender agrees to amend a loan to PIK status if a borrower with a previously cash-paying loan runs into trouble and needs to ask its lenders to accept PIK. While lenders may be able to decline that request, depending on restrictions within the original loan documents, it can be a difficult choice. If that borrower misses an interest payment, it’s likely to show up as a default or nonaccrual in the portfolio, and the lender may be compelled to mark down the value of the loan. Offering flexibility is also a primary draw of private credit lenders who sell themselves on a willingness to customize loans, and disallowing PIK too often could lead to borrowers and their private equity sponsors taking their business elsewhere. Unlisted BDC PIK LandscapeMorningstar Direct PIK data for the unlisted BDC universe provides some cause for concern. While PIK as a percentage of their income is low on average, it has been rising since December 2023.The 10 largest unlisted BDCs all have payment-in-kind levels in the low- to midsingle digits, although there is still notable dispersion within that group. While the largest unlisted BDCs tend to be in good shape, others report PIK well in excess of the average, including four in double digits.Pay More, LaterPIK interest payments are inherently riskier than cash interest payments since the borrower is paying its interest by issuing more debt. That’s especially so when a heavily indebted borrower can’t pay the existing interest on its debt and so instead chooses to become more indebted. PIK exchanges a higher future debt burden in return for near-term flexibility. While PIK can give borrowers the flexibility to turn a business around, they can be left in an even worse spot if that fails—no turnaround, more debt. Cash Flow ChallengesPIK isn’t just a risk because it increases a borrower’s debt burden. At high enough levels, it can also create a cash flow challenge for interval funds and unlisted BDCs. These funds are registered as regulated investment companies to avoid a second layer of federal income tax on their distributed earnings, which are already taxed at the investor level. To maintain RIC status, they must distribute at least 90% of the investment income generated by the portfolio to shareholders.That’s true whether the income is cash or PIK. In other words, PIK counts as income to a portfolio when calculating its required 90% distribution, even though the fund has not received any cash from the borrower. It’s phantom income. Suppose a fund reports $100 of income and must distribute $90. If $10 of the income comes in PIK form and the other $90 is received in cash, the fund has exactly enough cash income to cover the distribution. But if $15 is PIK, the fund receives only $85 in cash while needing to distribute $90. That leaves a $5 shortfall. This does not necessarily mean the fund will have trouble making its distribution. It can obtain cash from other loan repayments, refinancings, new investor inflows, selling loans, or even borrowing money from a bank. Those choices come with trade-offs, though, as borrowing adds portfolio leverage, while the other options leave less cash available for new investments or shareholder redemptions. Synthetic PIKMarkets are always evolving, and PIK is no exception. Regular PIK can create cash flow issues, as just described, and it’s transparent in SEC filings, where it’s called out as a component of income. To solve the cash flow problem, the private credit industry has created something called synthetic PIK. Unfortunately, this has also made PIK less transparent. With regular PIK, the interest is paid by growing the balance of the original loan. With synthetic PIK, a second loan is made to the borrower, who uses that new money to cover—in cash—the interest payments on the original loan. Synthetic PIK is like using a second credit card to pay the interest—and only the interest—on the first credit card. Of course, then the interest starts ticking on the second card, too.The second loan used to facilitate synthetic PIK is often a delayed draw term loan or a revolver. Rather than borrowing money in one lump sum, like a traditional loan, DDTLs and revolvers allow the company to periodically borrow in discrete amounts, such as the exact amount required to pay the interest on the first loan. Critically, because the interest payments on the original loan in a portfolio are still being delivered in cash, a fund holding the loan doesn’t record the payment as PIK income. eliminating problems for a fund trying to manage its cash flow. If the second loan has the same interest rate as the original loan, then the borrower’s total debt outstanding grows at the same rate as if it were a regular PIK structure, and its total interest cost remains the same. The difference is entirely in the optics, in what gets labeled PIK income versus cash interest income. The labeling difference is material, though. It makes managing cash flows easier for the private credit fund manager. It also allows the manager to get around PIK restrictions in structures such as collateralized loan obligations, which often limit PIK loans to 5% or less of assets. CLOs are a major source of financing for BDCs, so too much observable PIK income can restrict a BDC’s access to fresh capital. Defending Synthetic PIKTo give the market some credit, there can be real advantages to synthetic PIK over regular PIK. The DDTL often comes with conditions that function like a gate controlled by the lender. There are minimum draw amounts, a finite availability period, and covenant compliance requirements. Sometimes DDTLs require a sponsor to contribute new equity to the company every time money is drawn. There are also often fees on undrawn capital, which means the lender is earning a return even when the borrower isn’t using the DDTL.What to Make of PIKPIK grants borrowers greater flexibility to navigate the business cycle and their own changing fortunes, which is the main draw of private credit over public credit. This flexibility can keep returns high for investors in semiliquid private credit funds, but it also makes it harder to know the overall health of a fund’s portfolio because loans of PIK-paying borrowers often remain marked at or near par. Therefore, the level of PIK as a percent of total investment income is an effective way to monitor PIK-associated risks in a portfolio, and that data is available to Morningstar Direct users today. Among unlisted BDCs, PIK income has been growing since December 2023, though it remains contained on average.Unfortunately, the development of synthetic PIK represents a step away from transparency, as it’s not disclosed in filings and not included in Morningstar’s PIK data collections to date. Synthetic PIK maintains flexibility for the borrower while extending it to the portfolio manager. But it does so at the expense of shareholders, potentially trading away their long-term confidence to gain a little short-term flexibility.

Buying portfolio insurance to protect against falls in the market — if the outcome of the midterm elections is disputed — is so obvious to Kevin Muir, he regards it as a “chip shot.”

Suze Orman, a financial personality worth roughly $75 million, just told The Wall Street Journal that she never eats at restaurants. Not because she cannot afford to. Because she thinks you should not either.

The author and television host who has spent decades telling Americans how to handle their money, gave a recent interview to The Wall Street Journal where she made her position clear.

“I refuse to eat out,” she said. “I think that eating out on any level is one of the biggest wastes of money out there,” Fortune reported.

What Suze Orman says about dining out

“We still to this day eat at home,” Orman told the Journal.

On the day of the interview, her wife Kathy Travis had cooked congee rice for lunch and meatloaf for dinner.

The couple does go out occasionally. But Orman said it is never because she wants to spend money on restaurant food. It is because friends want to meet, and she would rather pay the bill than watch people with less money spend what they should not.

“If we go out to eat, the deal is we have to pay because I am not going to let people, who I know don’t have the kind of money that we have, waste their money on food eating out,” she said.

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Her criticism has gotten sharper as restaurant prices have climbed. Between December 2024 and December 2025, prices for food away from home rose 4.1%. Food consumed at home rose 2.4% over the same period. Overall consumer prices rose 2.7%, according to BLS data.

Fast food has not escaped the trend.

“Look up McDonald’s. Look up Taco Bell. Are you kidding me? $23, $30 just to go to McDonald’s for whatever you eat there,” Orman said.

Why Orman also refuses to buy coffee out

The same logic applies to coffee. Orman, who is 75, brews Cafe Bustelo at home every morning. She is not a Starbucks customer.

“I would drop dead before I bought a coffee,” she told the Journal. “I do one cup a day, and that’s it.”

Her point is not that a single latte will destroy your savings.

The concern is what happens when that latte becomes a daily habit, layered on top of lunches out, weekend dinners, delivery orders, and everything else. Small purchases repeat. They compound. The money that funds them does not.

Orman has said the real cost of daily coffee is not the $5 or $6 you hand over at the counter. It is the years of compounding that money never gets to do. She has told audiences that small regular savings invested early can grow into $1 million or more over a lifetime, depending on returns and timeline.

As an example: investing $100 a month at a hypothetical 7% annual return for 40 years would produce roughly $263,000 before taxes and fees. Investment returns are not guaranteed, and actual results will vary depending on what you hold, when you invest, and market conditions over time.

Orman’s criticism applies most directly to people carrying high-interest debt or with no savings cushionAlexander/Getty Images

What this actually costs most Americans each year

Run the numbers on your own spending and you may find that restaurant and coffee habits add up faster than expected.

A $6 coffee five days a week comes to about $1,560 a year. A $25 restaurant meal once a week is roughly $1,300 annually before tip, tax, and getting there. Together, those two habits cost close to $2,900 a year.

That is money that could go toward an emergency fund, a credit card balance, a retirement contribution, or a down payment. It does not have to go there. But you should know it exists as an option before you spend it automatically.

Orman’s criticism applies most directly to people carrying high-interest debt or with no savings cushion. If you have $10,000 on a credit card at 20% interest and you are spending $300 a month eating out, that is a meaningful trade-off worth thinking about.

How to use Orman’s advice without going to extremes

Orman herself is not a model of bare-minimum spending. She flies private. She has owned properties in Manhattan, the Bahamas and South Africa. Her point is not that you should never spend money on anything enjoyable.

It is that you should be deliberate about where your money goes. A weekly dinner out that you plan for, enjoy, and can afford is different from eating out four nights a week because you did not feel like cooking. One is a choice. The other is a habit that does not serve you.

The simplest way to apply her thinking: track what you spend on restaurants, delivery, and coffee for one month.

Add it up. Then look at your savings rate and any debt you are carrying. If the spending is comfortable with where everything else stands, keep it. If it is not, you now know exactly what to cut and how much it would free up.

Orman has said she dislikes strict budgets.

“If you restrict, you limit, you cut back, you don’t buy this, you don’t buy that, and then all of a sudden you explode, and you go out, and you buy everything at once,” she told the Journal. Her preference is awareness over deprivation. Know what you spend. Decide if it is worth it. Then decide consistently.

Related: Suze Orman says the danger has shifted to the employed

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Related: Amazon’s $139 farmhouse storage cabinet is 6 feet tall and has 5 spacious shelves

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Shop more deals

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Oil just spiked past $90 a barrel, and the Federal Reserve looks more likely to raise rates than cut them next month.

Jim Cramer thinks that combination changes the playbook, and he is putting real money behind that view.

On the Tuesday, Sept. 1, episode of “Mad Money,” the CNBC host told viewers that surging oil, rising bond yields, and fresh Middle East tensions call for a more defensive approach, even with many companies still posting strong results.

His reasoning was blunt. “We simply aren’t in an environment that’s conducive to big capital gains, especially during September, which is historically the weakest month of the year,” Cramer said.

Cramer has hosted “Mad Money” since 2005 and managed money as a hedge fund manager before that, so his defensive shifts tend to draw attention when the backdrop turns rough. 

Here is what he actually did, and how you can replicate his moves in your portfolio.

Why surging oil and a possible Fed rate hike changed Cramer’s playbook

Two forces are squeezing the market at the same time, and both hit stocks through the same channel.

The first is energy. 

West Texas Intermediate crude jumped 5% to more than $90 a barrel after the U.S. military launched new strikes against Iranian targets near the Strait of Hormuz, following attacks on two oil tankers in the shipping route.

That matters because higher oil feeds straight into inflation. 

When gasoline and shipping costs rise, companies pay more to operate, and consumers have less to spend on other things.

The second force is the Federal Reserve. 

Fed Chair Kevin Warsh signaled at Jackson Hole that he’s more worried about inflation than slowing growth, a stance that points toward higher rates. Traders quickly responded by pricing in higher odds of a rate hike.

Markets now price a 66% chance of a quarter-point hike at the Sept. 15-16 meeting, Marketplace reported, up sharply from roughly a third before the speech.

Higher rates and oil prices both reduce what investors will pay for future earnings, which is why Cramer moved first.

Jim Cramer says surging oil prices and a possible September rate hike call for a more defensive approach to the market.Slaven Vlasic / Getty Images

Move 1: Raise cash to 15% for a shot at buying quality stocks cheaper

Cramer’s first step was to build a bigger cushion.

The Charitable Trust, the portfolio used by CNBC’s Investing Club, raised its cash position to 15%, a level Cramer called “extremely high.”

For readers, cash here means money not currently invested in stocks. It earns little, but it does not fall when the market drops.

That buffer does two jobs. It protects the portfolio during a pullback, and it gives Cramer money ready to spend when prices fall.

“We want it that high because without a true end of the war, you don’t know when the Iranians will provoke the president,” Cramer said.

He is not rushing to buy every dip, either. Cramer said he wants to see investor sentiment turn considerably more negative before putting more money to work.

How ordinary investors can apply this

Review how much of your portfolio sits in stocks versus cash right now.

Decide on a cash level you can hold without panic if September gets rocky.

Treat that cash as a buying reserve, not idle money.

Move 2: Cut data-center exposure by exiting Corning and trimming Broadcom

Cramer’s second move reduced his bet on the pricey corner of the AI trade.

The Trust exited its remaining Corning (GLW) position on Tuesday, Sept. 1, after trimming it the week before. 

Related: BMO sees writing on the wall for Broadcom stock after earnings

It also cut its Broadcom (AVGO) stake to buy more Cardinal Health (CAH).

The Investing Club sold 165 shares of Broadcom at about $361, cutting its total holding in half. This move locked in a massive 323% profit on the shares originally bought back in 2023. 

The logic is straightforward. High-multiple growth stocks carry rich valuations, and those valuations shrink fastest when rates and oil climb together.

Importantly, Cramer said the move does not reflect weakening AI demand. He pointed to Dell’s strong results as evidence that underlying demand remains solid.

Broadcom heads into its own fiscal third-quarter report with expectations set unusually high, which is the kind of setup Cramer wanted to lighten up on before the print.

Move 3: Rotate into Cardinal Health for steadier, defensive demand

Cramer put some of that freed-up cash into healthcare.

The Trust bought 50 shares of Cardinal Health at roughly $229, lifting its position to about 2.5%.

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Healthcare tends to hold up when the economy slows, because people still fill prescriptions and hospitals still need supplies, no matter where oil trades.

The company also gave investors a reason beyond the defensive label. 

Cardinal Health expects its earnings to grow by 13% to 15% next year. This prediction is higher than the $12.04 per share that Wall Street analysts were expecting.

Cardinal Health reported that it generated about $5 billion in adjusted free cash flow in fiscal 2026, which supports both its dividend and its debt reduction.

This is the classic defensive trade: Swap some volatility for steadier demand and a modest, reliable payout.

What still has to happen before the defensive trade pays off

Cramer’s shifts are a bet, not a guarantee, and a few things need to break his way.

Oil would need to stay elevated or climb further for the inflation threat to stick. If tensions near the Strait of Hormuz ease, crude could fall and the pressure on stocks could lift.

The Federal Reserve also has to follow through. Not everyone agrees a September hike is coming, since some analysts note the softer labor market could hold the Fed back, CNBC reported.

Healthcare carries its own risk, too. Defensive names can still fall during a broad sell-off, and Cardinal Health already trades near the high end of its recent range at about 18 times forward earnings.

There is also a cost to holding 15% cash. If the market rallies instead of falling, that cash earns very little and limits returns.

How investors can read Cramer’s defensive shift

You do not need to copy Cramer’s exact trades to take something useful from them.

The clearest takeaway is to check your own concentration. 

If most of your money is tied up in just a few booming AI stocks, an oil and interest rate shock will hurt you much more than a diversified investor.

Here are a few practical steps worth considering:

Look at how much of your portfolio depends on highly valued tech.

Build a cash reserve you can deploy if September brings lower prices.

Pay down variable-rate debt before higher rates make it more expensive.

That last point applies whether or not you own a stock Cramer mentioned. 

If the Fed hikes interest rates, your credit card bills and loan payments will get more expensive almost immediately. 

The bottom line on Cramer’s rising-rate and oil defense

Cramer’s message for September is simple: Protect what you have before chasing more.

He raised cash to 15%, trimmed the expensive part of the AI trade by exiting Corning and cutting Broadcom, and rotated into Cardinal Health for steadier demand.

The strategy works best if oil prices stay high and interest rates rise. However, if the stock market goes up instead, you will miss out on some extra profits. 

For most readers, the useful move is not to mirror the trades but to review portfolio risk, keep some cash on hand, and clear costly variable debt while rates still hang in the balance.

Related: Marvell investors must carefully consider latest Google deal