Lower mortgage rates are on the way in the year ahead, according to a top UWM executive – and that means brokers need to gear up for an uptick in purchase and refi activity
It may be too early to predict with confidence exactly how the 2025 mortgage market will play out – but signs of a positive year ahead are strengthening, according to a top lending executive.
While mortgage rates have crept higher in recent weeks after a months-long slide, they’re expected to start ticking down again next year, with other factors including an improving housing inventory outlook among the reasons Alex Elezaj (pictured top), executive vice president and chief strategy officer at United Wholesale Mortgage (UWM), believes a strong 2025 is on the way.
Federal Reserve rate reductions had little impact on mortgage rates when they arrived, largely because markets had already priced in expectations of those cuts. “But over the next 12, 18 months, we expect to see [rates] coming down,” Elezaj told Mortgage Professional America. “That could [begin to] happen next month or it could happen in three months.”
The mortgage market saw an upswing in activity when US 10-year treasury yields plunged in late July, and Elezaj said UWM is poised for the next time those yields begin to fall. “We expect that if the 10-year continues to drop or there’s more activity on the spreads, that could drive a lot of volume for us,” he said. “So we’re excited about that and, from a rate cut perspective, we expect that the Fed will continue to cut rates.”
With the presidential election over, borrowers look ahead
The culmination of a long and often contentious presidential election campaign, meanwhile, is another factor that Elezaj believes has instilled a degree of calm to markets and the economy. “People like certainty. Now it’s over and there’s no guessing – we have certainty on what the next administration is,” he said.
“I think, generally, the markets reacted really well to it, and hopefully we should be in great shape heading into 2025.”
According to Redfin, home tours and mortgage-rate locks surged in the days after the election, signaling renewed interest in the housing market despite ongoing challenges like high mortgage rates and steep home prices.https://t.co/1vVBOGmO1j
— Mortgage Professional America Magazine (@MPAMagazineUS) November 16, 2024
When mortgage rates began falling earlier in the year, plenty of homeowners started to consider the possibility of a refinance – something that hadn’t been a serious prospect amid rising rates in 2023 and the beginning of 2024.
Mortgage refinancing opportunities are set to emerge in 2025
While rates may still be high compared to the rock-bottom lows of the COVID-19 pandemic, Elezaj urged mortgage brokers to have detailed conversations with their clients to see where a refinance might make sense, and address misgivings they might have about going through a refi right away.
Many consumers may still believe now isn’t the right time to refi their mortgage, “but they might be sitting on a 7.5% loan,” he pointed out. “They need to be saving money now. We still do a tremendous amount of refi. So the reality is that consumers need to get over the [hesitance] of ‘Hey, should I wait?’”
If borrowers can go from a 7.5% to a 6% mortgage right away, Elezaj said, they should do it – and then refinance again in six months or a year if it drops again. “Take the opportunity that’s available to you right now and execute on it,” he said. “That’s the way that we think about it, and I know that’s the way that brokers are also coaching consumers across America.”
Elezaj was speaking with MPA after UWM reported $39.5 billion in Q3 origination volume, up from $29.7 billion the same time last year, although its net income dipped in large part thanks to a decline in fair value of MSRs (mortgage servicing rights).
He pointed to the mortgage broker channel’s growing market share – and UWM’s strong influence within that space – as positive trends for the company as it reflects on the year that’s been and looks forward to 2025.
The company has seen “tremendous growth” in its purchase business throughout the year, and is also ready for the likely spike in refinances that’s on the way. “It’s been exciting – and then obviously when rates come down and it becomes more of a refi market, we’re going to do great in that market also,” Elezaj said. “We perform well in both environments.”
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