Is improved housing affordability enough to bring buyers back into the market?
The second half of 2025 offered mortgage brokers a few opportunities to capitalize on rate declines and close deals. The rate drops also opened small refinance windows throughout the year.
Barring unforeseen macroeconomic factors that could throw a wrench into forecasts, most experts believe rates will continue to slide gradually through 2026.
The Mortgage Bankers Association (MBA) expects rates to remain between 6% and 6.5% in 2026, even with anticipated Fed rate cuts, primarily due to concerns about inflation and growing budget deficits. However, as was the case in 2025, when mortgage rates drop, opportunities will open for brokers.
Mike Fratantoni (pictured top) is the chief economist and senior vice president of research and business development at the MBA. He forecasts that an increase in housing supply, combined with cooling rates, will open the door for homebuyers in more markets in the coming year.
“I think in more and more markets around the country, it's going to be a buyer's market as opposed to a seller's market that it’s been for a number of years,” Fratantoni told Mortgage Professional America. “That potential buyer is going to have more leverage in the transaction than we've seen for some time. That’s one more benefit, in addition to the affordability picture getting a little bit brighter.”
Affordability improvements
Despite all the headwinds in 2025, the US economy continues to show signs of growth. Jerome Powell, Fed chair, cited continued expectations that growth can help overcome some of the other headwinds on the horizon in 2026.
“If you look broadly at outside forecasts, you do see a pickup in growth in many of those now,” Powell said. “It's partly that consumer spending has held up. It's been resilient. To another degree, it is spending on data centers, and related to AI, that has been holding up business investment. AI spending will continue. The consumer continues to spend. So it looks like the baseline would be solid growth next year.”
The question is whether the housing market will see some of that increased spending in the new year. Much of that will depend on continued affordability improvements in both the housing market and day-to-day home budgets. Fratantoni believes affordability will continue to improve next year.
“I think the affordability situation is going to get moderately better over the next couple of years,” Fratantoni said. “We expect that wages are going to be growing faster than rents, and going to be growing faster than home prices. So that, in combination with mortgage rates staying stable, should make it slightly easier over time for folks to afford that housing payment.”
Part of the equation behind that improved affordability is offering a wide range of financing options, especially for first-time homebuyers. Fratantoni also said it is important to make sure those new buyers are in a position to afford that home for the duration of the loan.
“Just like it has been for decades, it is tough for someone to break into the market,” he said. “Thankfully, there are a range of different financing options, and now a range of different down payment assistance programs and other methods to help somebody get in. Of course, we also want to be sure that it's sustainable homeownership, so it's a payment and a homeownership position that they can maintain over time with life shocks that come along the road.”
Other improvements needed
Affordability in the mortgage industry takes other forms as well besides ensuring an affordable house payment.
One of the biggest hot-button issues at the moment is the growing battle regarding increasing credit reporting costs. Brokers have reached their breaking point with the price increases.
Brendan McKay of the Broker Action Coalition warns that rising credit report costs have pushed brokers to a breaking point. He says the structure allows unchecked pricing, calling for stronger oversight and louder industry pushback.https://t.co/IyHAm5uqaf
— Mortgage Professional America Magazine (@MPAMagazineUS) December 5, 2025
While everyone knows something should be done, there are disagreements on how to get there. The MBA is proposing a one-credit-score pull system for borrowers with a credit score of 700 or higher. Some brokers, including Kimber White, president of NAMB, are not sure one score is enough information.
Fratantoni said the industry must continue working to make the mortgage process more efficient and cost-effective for both borrowers and brokers.
“Whether it's at the policy level, or at the individual lender level, you're always sort of looking at, are there steps in this process that we can make more efficient?” he said. “In the highly competitive mortgage market that we have, if you make the process more efficient, it's ultimately going to accrue to the benefit of that borrower, that potential homeowner.
“I don't know that there's any silver bullet out there. But there are a lot of lenders investing a lot of money in new technology to try to make the process more efficient, and I do think the end result will be lower costs for consumers.”
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