Refinance, Rates & Regulations: A First Look at What’s Ahead for the Mortgage Industry in 2026

Mortgage 2026: What Industry Leaders See Next

In January, we hosted an annual outlook webinar, “Refinance, Rates & Regulations: A First Look at What’s Ahead for the Mortgage Industry in 2026,” featuring two industry leaders: Logan Mohtashami, Lead Analyst at HousingWire, and Brian Vieaux, President of MISMO.

We looked back at the forces that shaped 2025, reviewed forecasts for 2026, and discussed what’s actually changing in housing, lending, and borrower behavior—not what we hope will change.

Here’s the takeaway: the mortgage market enters 2026 in a more stable and predictable position than we’ve seen in years. While rates are still elevated, equity levels remain high and volatility has eased as borrowers are in a strong financial position by historical standards. This isn’t the setup for a sudden boom, but it is the foundation for a durable recovery driven by purchase activity, home equity lending, and disciplined operational execution.

Most forecasts point to 10–25% origination growth in 2026, building on the 19% year-over-year increase from 2024 to 2025. The path forward is steady, not speculative.

Below are the key dynamics supporting that outlook.

1. Rates are stabilizing near 6%, with modest downside potential

After years of volatility, mortgage rates have settled into a more consistent range. Rates ended 2025 in the low-6% range—the lowest levels since 2023—and most forecasts now cluster between 5.75% and 6.25% heading into late 2026. 

What’s driving this isn’t aggressive Fed cuts alone, but a healthier backdrop:

• A gradually softening labor market
• Mortgage spreads returning closer to historical norms
• Significantly reduced rate volatility

The result is a greater predictability for lenders and borrowers alike. While a return to sub-5% rates isn’t expected near term, the period of “higher and wildly volatile for longer” appears to be behind us.

2. Origination volume is set to grow, driven primarily by refinance
One of the clearest signals from the data is that overall origination volume is poised for a meaningful rebound in 2026. Forecasts point to double-digit YoY growth:

• MBA projects roughly +10% total origination growth
• Fannie Mae forecasts a more aggressive +25% total growth

In both outlooks, refinance activity is the primary growth driver. MBA expects ~9.5% YoY refi growth, while Fannie Mae projects a much sharper uptick of 70% YoY growth as rate-driven re- borrower re-engagement takes hold.

Purchase growth remains positive but more measured

• MBA = +6% YoY
• Fannie Mae = +8% YoY

This reflects improving demand on the homebuying side, tempered by ongoing affordability and inventory constraints. The wide spread between forecasts doesn’t signal downside risk. It underscores uncertainty around timing, not direction. Both point to renewed activity in 2026.

3. Affordability and inventory are improving

Beyond rates and volume, the broader housing market points to a more balanced environment. As Logan put it during the discussion, “the process is healing.” Inventory is rising, price growth is cooling, and buyers and sellers are becoming more evenly matched. While housing supply remains below long-term historical norms, the increase over the past year has been meaningful enough to ease pressure across many markets. 

This shift is already showing up in the data:

• Monthly housing supply is up
• Home price appreciation has slowed materially
• Wage growth has begun to outpace home price growth in many regions

Purchase application data has also improved, reinforcing the view that demand is returning in a more sustainable way. This isn’t a rapid reset. It’s normalization, and it creates a healthier backdrop for steady activity.

4. Home equity has more runway than refinance alone

While refinance activity is expected to grow in 2026, the panel was clear that home equity lending has deeper structural support than a traditional rate-driven refi cycle.

Refinance eligibility remains concentrated among borrowers who originated in the last few years at rates in the 6.5–7.5% range. That’s a meaningful segment, but a limited segment of the market. In contrast, home equity is broadly distributed across decades of homeowners.

• Roughly 40% of U.S. homes have no mortgage at all
• For those that do, average loan-to-value ratios are ~44%
• Most homeowners have FICO scores above 740
• Homeowners hold approximately $38 trillion in equity

As Logan explained, there are far more borrowers sitting on substantial equity than those who are purely refi-eligible. Brian reinforced that this is playing out at the loan-officer level, with borrowers increasingly choosing HELOCs as a way to access cash without giving up low first-lien rates—often opening lines for flexibility rather than immediate use. Even modest rate cuts, particularly on short-term and adjustable products, expand this opportunity further.

Even modest rate cuts, particularly on short-term and adjustable products, expand this opportunity further. The result is a market where purchases, refinances, and home equity lending can grow together, supporting a more resilient recovery.

What this means for 2026

The takeaway from this panel wasn’t just optimism, but accountability. As Logan put it, “This is game time.” 

Rates are no longer the excuse. Market conditions are more stable, inventory is rising, and demand is returning. The organizations that win in 2026 will be the ones that execute well: scaling efficiently as volume grows, leaning into digitization and automation, reducing friction and errors, and showing up as trusted advisors when it matters most. Brian emphasized that alignment across standards, platforms, and partners will be critical to scale and avoid recreating the inefficiencies of past cycles.

The 2026 mortgage market won’t be defined by hype or fear. It will be defined by fundamentals and performance. While a broad refinance boom is unlikely unless rates fall meaningfully below 6%, steady, durable growth driven by purchases, home equity lending, and better execution across the ecosystem feels increasingly realistic. For an industry that’s weathered one of the toughest periods in its history, that’s a meaningful and welcome shift.

Now with the new Fed Chair… time will tell.