Why one expert believes hidden volatility could cause a big rate shift
Despite economic volatility throughout 2025, mortgage rates have largely remained on a smooth path over the last year.
Early in the year, rates stayed mostly steady. Late in the year, rates slowly declined as a weaker jobs market forced the Fed to lower its funds rate three times.
But despite tariffs and other geopolitical and economic issues, the market remained mostly on a steady course. One expert thinks a calm surface could mask volatility in the new year.
John Walkup (pictured top), co-founder of UrbanDigs, said one major issue could be enough to get the markets fired up, creating opportunities or headwinds for mortgage brokers.
“I think that the markets right now are surprisingly calm, which can hide a lot of volatility,” Walkup told Mortgage Professional America. “These stable markets are almost storing energy. It’s like a flywheel of energy. I feel like you get one little deviation, you could actually see a lot more volatility than is being priced in right now. So I feel like we're kind of on thin ice in terms of volatility.
“It looks calm at the surface, but you dive beneath it, you get one move in inflation, or you get one move in unemployment, the wrong way, and you could see some really interesting moves which could, I think, really rock the Treasury market. That's something that we’re keeping an eye on.”
Volatility kills pipelines
Walkup believes it is wise for both mortgage brokers and real estate agents to keep their pipelines overfilled to prepare for any volatility that could kill deals before they close.
“Volatility is going to kill pipelines before it starts killing deals,” Walkup said. “Once you get a deal in the pipeline, that's great, you'll most likely go to closing. If you're thinking ahead, smart agents and mortgage brokers are assuming that there's going to be some fallout. They're going to work to overbuild the pipelines on the front end, and they're going to triage to build resilience. And they’re not going to count their chickens before they hatch.”
If the volatility remains under the surface of the market, then it comes back to rate trends. With CME FedWatch projecting two rate cuts for the year, Walkup thinks rates will likely stay fairly steady. If that happens, it won’t be a promise to lower rates that gets deals done.
“There's not a lot happening right now,” he said. “So it's less about rates being on a downtrend. It's less about where rates are going, and it's much more about individualized advice. Like, ‘How do you get this deal across the finish line?’ And I feel like that applies on the mortgage broker side as well as on the agent side.”
He thinks that it could be a tough market for generalists to find traction. Meanwhile, those brokers and agents who can specialize in certain loan types and property sectors may find more success.
“There probably needs to be a little bit of specialization in the coming year, whether that's first-time buyers or equity-rich ones that want to move up, or investors,” Walkup said. “But I get the sense that it's going to be a very difficult market for generalists, because we're kind of condensing where there's not a lot of action right now. It’s going to be a tricky market going ahead. A lot more smarts are needed than guesswork.”
Cautious optimism for 2026
Of course, one thing that would help fuel the mortgage market is a continued fall in rates. While the industry waits and hopes for that as the year goes on, Walkup said the next primary concern is how fast deals can be closed.
“When we think about real estate, we are very transaction-oriented,” he said. “The same thing with real estate brokers applies to mortgage brokers, which is, it's less about price, and it's more about transaction volume. So we're always interested in how we can help transactions occur faster and how we can speed up that process.
“There are some macro themes that will certainly help. If you have mortgage rates at 2%, that's great. People are going to jump back in, because affordability suddenly becomes less of an issue. It pulls people in. You get that transaction volume high.”
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— Mortgage Professional America Magazine (@MPAMagazineUS) January 7, 2026
Despite the potential hidden volatility and other headwinds, Walkup sees some bright spots developing both in the New York City area where he is located and nationwide.
“I feel like I'm cautiously optimistic for 2026,” Walkup said. “I think we're starting to see some green shoots, especially here in New York City. But I feel like across the country, we're starting to see some glimmers of hope, and I'm hoping that that'll catalyze. I'll keep my fingers crossed, throw salt over my shoulder, touch wood, whatever it is we've got to do. But I'm hopeful that 2026 is going to be better than 2025.”
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