2026 mortgage lending predictions

by Chicago Agent

December 01, 2025

Featuring the perspectives of:

Shant Banosian
President, Rate

Matt Horney
Senior Lending Manager, Chase

Tim Tuz
SVP Capital Markets, Wintrust Mortgage

Neena Vlamis
CEO, A&N Mortgage

What do you expect to see in the mortgage rate environment in 2026, and how might policy or Fed decisions shape consumer borrowing power?

Shant Banosian: Heading into 2026, I expect mortgage rates to stabilize in the high-5% to low-6% range as the Fed transitions from a restrictive stance to a more neutral one. Inflation has cooled, but the job market is flashing warning signings, so the Fed will remain cautious and data dependent, wanting to ensure long-term stability before aggressively cutting rates.

The real opportunity lies in spread compression, which could improve borrowing costs even if the Fed moves slowly. For consumers, that means a noticeable increase in buying power, and for lenders, an opening to re-engage both new and existing clients. The key is being ready to move fast when economic data shifts.

Matt Horney: Current indicators suggest another decrease in rates before the end of the year, but consumers should remain cautiously optimistic. If this happens, it could increase consumer borrowing power, as well as home-buying optimism, heading into 2026. For example, we saw increased demand from prospective buyers when rates dipped following the last rate cut in September. In response, lenders are likely to meet consumers where they are and offer more incentives. In Chicago specifically, where about 35% of active listings recorded a price reduction, such adjustments continue to help sellers reach buyer expectations.

Tim Tuz: I believe that the rates will continue to drift lower, however it will continue to be at a very slow pace. I would expect the rates at the end of 2026 to be around mid to high 5s. The larger wildcard would be what FHFA and Treasury and Federal Reserve can come up with reforms to Fed’s MBS Purchase program in order to lower rates, or adjusting loan level price adjusters or guarantee fees in order to drive rates lower.

Nina Vlamis: By 2026, the mortgage rate environment will likely reflect the Federal Reserve’s ongoing efforts to balance inflation and economic growth. If inflation remains contained, the Fed may maintain or gradually lower rates, supporting consumer borrowing power. However, persistent inflation or global economic uncertainty could prompt rate hikes, making mortgages more expensive and reducing affordability. Policy decisions, such as adjustments to quantitative easing or changes in regulatory frameworks, will also play a role. Ultimately, the interplay between Fed policy, economic indicators and regulatory changes will shape the cost and availability of mortgage credit, directly impacting consumers’ ability to purchase homes.

Which loan products or financing structures do you believe will rise in popularity by 2026, and why?

Banosian: By 2026, affordability and creativity will drive product demand. Buydowns will continue leading the way, especially 2-1 and 1-0 structures, giving buyers early payment relief without hurting seller proceeds. We will also see growth in portfolio and [non-qualified mortgage] products such as [debt service coverage ratio], bank-statement and asset-depletion loans as more borrowers fall outside traditional income documentation. Second-lien and blended-rate options will help homeowners unlock equity without losing their low first mortgage. On the access side, down-payment assistance and multilingual lending platforms will expand reach to first-time and Spanish-speaking buyers.

Horney: Interest in home-equity products, particularly HELOCs, has continued to grow as more people become aware of their benefits and we’ve seen near-historic surges in home valuations. According to ATTOM, nearly 50% of homeowners were considered ‘equity rich’ in Q4 2024, and Cotality reports the average homeowner has approximately $302,000 in equity. With rates showing signs of decreasing again, borrowers may benefit in 2026 to explore HELOCs as a flexible financing option for an immediate cash need like a renovation or debt consolidation.

Refinance applications have also increased, showing demand from existing homeowners to take advantage of lower rates or the home equity they’ve built via cash-out refinances. If this trend of declining rates continues in the new year, we expect to see more buyers enter the market and homeowners take advantage of refinancing opportunities.

Tuz: I believe that adjustable-rate mortgages will continue to pick up market share with the yield curve steepening as borrowers continue to look for ways to get a lower rate in the near term. In addition, I believe construction to permanent loans will continue to grow as more borrowers choose to build their home instead of purchasing an existing home.

Vlamis: In 2026, adjustable-rate mortgages may regain popularity if fixed rates remain elevated, offering initial affordability to buyers. Additionally, products tailored for first-time buyers, such as low-down payment loans and government-backed options, will likely see increased demand as affordability challenges persist.

I am obsessed with innovative financing structures, including shared equity arrangements and digital mortgage platforms. These may also rise, driven by technology and consumer desire for flexibility. Green mortgages, incentivizing energy-efficient homes, could gain traction, as rising costs are around. These trends will be shaped by market conditions, regulatory support and evolving consumer preferences, with lenders adapting their offerings to meet changing needs.

How do you see the lender-Realtor relationship evolving in 2026 to better serve clients in a competitive market?

Banosian: The most successful lender-Realtor partnerships in 2026 will be data-driven, proactive and co-branded. Agents do not just need a loan officer; they need a business partner who brings tools, insights and solutions that help convert more buyers and move stale listings. That means providing instant buydown analyses, equity alerts, loyalty tracking and property marketing assets automatically and at scale. The traditional referral-for-referral model is being replaced by a shared growth model where both sides win when deals close faster and pipelines stay full. Technology will handle the automation, and human connection will handle the trust.

Horney: In 2026, we can expect to see this relationship become more collaborative, driven by the need to better serve clients quickly in response to market movers like rate reductions, etc. As AI and other high-tech become more integrated in practices and platforms, lenders and Realtors will be able to offer clients a hyper-personalized experience, tailored to what fits best for the client.

At the same time, the rise of misinformation and market volatility will further elevate the need for trusted advisors. Clients will look to professionals not just for insights and specifics, but for transparent, honest guidance when navigating such a competitive environment. This shift will encourage lenders and Realtors to work more closely together with shared tools and educational resources.

Vlamis: By 2026, the lender-Realtor relationship is expected to become more collaborative, and you will see more in-person events. … Joint educational initiatives and co-branded marketing may help both parties better inform buyers about financing options and market conditions. As competition intensifies, Zillow takes over, the smaller boutique lenders and Realtors will focus on delivering personalized service, leveraging data analytics to anticipate client needs and streamline the homebuying process.

Boutique and portfolio lending will be crucial in navigating regulatory changes, market volatility and shifting consumer expectations, ultimately providing a more holistic and client-centered experience. On a side note, you’re going to see more women get into the business.