The materials available in this article are for informational purposes only and not for the purpose of providing legal advice. You should contact your own advisors with questions regarding the mortgage lending software content herein. The opinions expressed in this article are the opinions of the individual authors and may not reflect the opinions of MeridianLink, Inc.
Yes, the skies are mixed. Inflation is adding pressure, buyer behavior is shifting, and uncertainty still hangs in the air. But that doesn’t mean the market is stalled, it means it’s changing. And for proactive lenders, change brings opportunity. With smart strategies and the right mortgage lending software, your financial institution can help borrowers move forward with their homeownership dreams and grow stronger in the process.
Here’s a look at some of the current housing market trends and key opportunities you’ll want to keep on your radar.
Inventory is on the rise, creating more opportunities for buyers as demand gradually builds.
Inventory is rising, opening the door to more opportunities for buyers as demand begins to build. In May, active home listings across the U.S. topped one million—a dramatic increase of 199% from the low point in February 2022. Sellers are returning to the market in greater numbers, now outnumbering buyers by 34%. While this might seem like a challenge, it actually signals a shift toward a market that could lead to more balanced prices and renewed interest from buyers.
So, where some see clouds, you should see opportunity. This is your chance to close or extend the gap, and guide hesitant buyers forward. By offering flexible loan products, education-focused outreach, and leveraging modern mortgage lending software, you can provide the clarity and confidence today’s buyers need to take action.
Inflation may test the homebuying journey, but momentum is building.
Rising costs are adding complexity to the homebuying process. From appraisals and homeowners insurance to property taxes, home inspections, and moving trucks, inflation is touching every step of the journey. And with the Consumer Price Index inching up again in May, it’s no surprise that some buyers are approaching cautiously.
But caution isn’t the same as retreat. Momentum is still gaining strength.
- The rate lock-in is loosening: Sellers who held out for historically low mortgage rates are now returning to the market. Whether due to job changes, life transitions, or return-to-office mandates, they’re listing their homes, even with higher borrowing costs.
- Buyer confidence is rebounding: Mortgage applications are up 20% compared to a year ago, signaling that more buyers are stepping off the sidelines—even as interest rates remain relatively steady.
Three silver linings for lending.
Right now, three trends may be pointing to sunnier days ahead for proactive lenders.
1. Cash purchases are declining
According to the National Association of Realtors, the share of all-cash buyers is falling—down from 28% to 25% YoY in April and from a high of 32% in January of 2024. That means more financed buyers are entering the scene, and that’s good news for lenders.
This shift creates a window of opportunity. When cash is no longer king, financing becomes the bridge to homeownership. Your institution can rise to the occasion by offering smarter, more flexible lending solutions. Adjustable-rate mortgages, FHA loans, and down payment assistance programs can make all the difference for budget-conscious buyers.
And with the right mortgage lending software, your team can reduce friction, process applications faster, and deliver a borrower experience that builds trust. In a competitive market, efficiency isn’t a luxury—it’s your advantage.
2. When sellers outnumber buyers, prices tend to cool
History shows a pattern: when more people sell than buy, home prices have eased. In 2018, mortgage rates peaked near 4.87%, and just one month later, sellers outnumbered buyers by over 9%. Three months after that? Home-price growth slowed to its lowest level in six years.
We saw the same trend in 2013–2014. When the balance tips, prices stabilize—and affordability improves.
That dynamic could play out again—potentially with even greater impact—if investors continue the trend they began last year. In 2024, investor home sales rose 5.2% year over year, outpacing investor purchases. If this momentum holds, it could significantly boost inventory, ease price pressure, and open the door for more first-time and budget-conscious buyers.
3. Mortgage spreads are uncharacteristically high right now
The gap between the 10-year Treasury yield and 30-year fixed mortgage rates—normally a reliable forecast for rate movement—has widened well beyond historical norms. Currently, spreads hovered around 249 basis points, well above the typical 150–200 range. That’s important, because if spreads begin to normalize—even without a Fed rate cut—mortgage rates could drop dramatically. And unlike Fed decisions, which happen on a set schedule, spread compression can happen at any time.
For borrowers, that means relief could come sooner than expected. And for lenders, it’s a reminder to stay ready with the right products, messaging, and mortgage lending software.
What can you do to prepare?
Today’s lending environment has certainly grown in complexity. Borrower profiles no longer fit neatly into traditional categories, so your approach needs to evolve.
- Start by shifting from transactional lending to a consultative model. Take time to understand each borrower’s unique situation and guide them with personalized, clear communication. This builds trust and loyalty, two essential ingredients in uncertain times.
- Next, invest in modern mortgage lending software. Automation accelerates approvals, cuts down errors, and simplifies workflows. This lets your team focus on delivering an exceptional borrower experience. Plus, technology supported by data-driven insights can help you spot qualified leads early and tailor loan options precisely to their need.
- At the same time, equip your team with knowledge of flexible financing solutions—adjustable-rate mortgages, FHA loans, down payment assistance programs. By explaining these options transparently, you empower borrowers and reduce their hesitation.
And remember, you don’t have to face these changes alone.
When the market gets cloudy, smart lenders shine with MeridianLink Mortgage.
Today’s lending environment demands technology that grows with your business and adapts to changing conditions. Legacy systems just won’t cut it. Upgrading your mortgage technology is a must if you want to navigate the market with confidence.
MeridianLink® Mortgage makes the entire lending process easier—from application all the way to close. No matter how the market changes, our platform helps you make faster decisions, reduce errors, and create smooth experiences that borrowers appreciate. You’ll be able to spot qualified buyers and offer the right mortgage options that fit their unique situations.
With smart automation, powerful data insights, and built-in compliance tools, MeridianLink Mortgage frees your team from tedious manual tasks. That means more time to focus on building strong, lasting relationships with your borrowers.
That’s how you don’t just weather the storm, you come out ahead when the skies clear.
Markets change. Conditions fluctuate. But trust? That endures.
Now is the time to double down on service, sharpen your strategy, and upgrade your systems. By showing up for your borrowers—calm, clear, and prepared—you’ll earn loyalty that lasts well beyond this market cycle.
And MeridianLink Mortgage is here to help you do exactly that.
