While buyers continue to hesitate, opportunities exist for brokers to help borrowers in other ways
The Federal Reserve decided not to cut rates last week, and with the temporary cooling of the China-US trade war, experts believe the central bank may limit the number of cuts it plans for the rest of the year. One expert warns that this strategy is trying the patience of borrowers.
Most experts were not surprised when the Fed held rates steady last week. After the Trump Administration and the Chinese government each announced reductions in tariffs, markets began betting that there would be only two more rate cuts for the rest of the year.
Michael Brennan is the president of Nationwide Mortgage Bankers (NMB). He believes the Fed's cautious approach may be holding rates higher and frustrating current and potential mortgage holders.
“The Fed’s decision to hold rates steady isn’t surprising, but it is testing the patience and financial flexibility of both buyers and homeowners,” he told Mortgage Professional America. “When the Fed addresses macro-level issues, the need for creative and proactive solutions and the consumer level remains.”
Hope on the horizon as applications are up
There could be hope on the horizon, as the Mortgage Bankers Association’s (MBA) weekly survey showed a 1.1% increase in applications, even with an increase in 30-year fixed-rate mortgages from 6.84% to 6.86%.
Purchase applications also saw a bump, up by 2.3% week-over-week and 18% over last year’s pace. MBA chief economist Mike Fratantoni noted an increase in inventory leading to a jump in applications.
“Despite the economic uncertainty, the increase in home inventory means there are additional properties to buy,” Fratantoni said. “Unlike the last two years, this supply is supporting more transactions.”
Christina McCollum of Churchill Mortgage says stalled refinances are leaving clients stuck in limbo, with burnout rising across the mortgage market. She hopes falling rates later this year will finally let homeowners “complete the loop.”https://t.co/7S7fCKB2Hv
— Mortgage Professional America Magazine (@MPAMagazineUS) May 14, 2025
Brennan sees buyers focused less on the rates and more on the opportunities that are available as more properties go up for sale.
“The market is not necessarily frozen,” he said. “It is shifting into a more strategic phase. Once buyers realize these trends, they will likely stop stalling and start acting on the housing inventory for sale within the current rate environment, and refinance in the future when appropriate.”
Equity opportunities for those who hesitate
Many potential properties remain unlisted as homeowners hesitate to make a move due to mortgage loans with historically low rates.
“One of the biggest challenges is consumer paralysis,” Brennan said. “Many homeowners are locked into low interest rates and do not want to give that up, while buyers are worried about overpaying.”
Brennan sees many of these potential sellers deciding to tap into their home’s equity instead of selling and upgrading their homes.
“US homeowners are sitting on over $35 trillion in home equity, the highest in recorded history,” he said. “We are helping clients access that equity without refinancing their entire mortgage. Second-lien solutions, HELOCs, and strategic borrowing are allowing people to consolidate debt, invest in income-producing opportunities, or support large expenses like tuition or home upgrades.”
In the current market, Brennan believes brokers can focus on educating clients on all their options and ensuring they make the right decision for their financial situation.
“An under-discussed issue is the widening financial literacy gap, which is contributing to stagnation in the housing market,” he said. “Amid economic uncertainty, many individuals are hesitant, waiting for ideal conditions to leverage their home equity or enter the market. This inaction can lead to missed opportunities for long-term financial stability and growth.
“Now is the time to shift the conversation away from rates and toward results. Instead of waiting for lower rates, help clients use the tools available today to improve their financial position.”
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