With 2025 approaching its swan song, this year’s housing market has proven to be frustrating for both consumers and industry professionals alike. High mortgage rates, exorbitant home prices, and the slow deterioration of general economic stability have nearly stifled the average American’s ability to purchase a home. HomeLight’s Lender Insights & Predictions for 2026 survey breaks down some of the causes, with insight from lenders at 80 top lending companies across the United States, including American Pacific Mortgage, Fairway Independent Mortgage Corporation, The Loan Store, and more. The full report can be downloaded here. Below is a look at some of the key takeaways: While these frustrations are expected to continue next year, looking ahead to 2026, loan officers are optimistic that reduced mortgage rates will lead to a bump in new mortgage originations. 85% of loan officers surveyed expect to see an increase in mortgage originations next year, with 44% predicting a gain of more than 10%. “We are heading into a shift. I believe we’ve hit our bottom for housing stagnation, and we will begin seeing a steady increase in home sales and a decrease in mortgage rates by the third quarter of 2026,” says Shannon Herrmann, a loan officer in Montana. Lenders are hopeful that future mortgage rate reductions will serve as a balm to soothe an already inflamed market. 74% of respondents say that a significant drop or stabilization in mortgage rates will drive the predicted increase in mortgage applications next year. Move-up buyers are predicted to be one of the most successful buyer demographics next year, according to 39% of surveyed loan officers. Will lower mortgage rates be enough to jolt the tentative or priced-out buyers? Industry experts aren’t so sure. Market conditions are widely expected to keep first-time buyers relegated to the sidelines, while swelling consumer personal debt amid the economic turmoil is pushing would-be homeowners to seek non-traditional solutions (and in some cases, bad decisions) to make homeownership a reality. “If unemployment rises, we will see a continued drop in the value of homes, anywhere from 5% to 15% for the year. I see the inventory of foreclosures rising due to the amount of credit card debt and bankruptcies. Interest rates will be lowered into the 5s for conventional and stay there all year,” says Greg Herman, a loan officer who has been in the industry for nearly 40 years. To break free of paying rent and possibly start gaining equity, many are turning to co-buying. “Friends, family members, or investors are teaming up to purchase a home together,” Mallory tells HomeLight. “I have seen multiple couples buy a home and share the mortgage as their starter home,” says Brittney Hansen, the loan officer from Colorado. “[Consumers] are buying homes with friends to create affordable living solutions with people they know well and want to live with, so they can build equity together,” says Shannon Herrmann, the loan officer from Montana. Co-borrowers and gifts from relatives or friends are also increasing in popularity as a way for younger buyers to enter into the home market, signaling a further divide in the housing market between those with generational wealth or other connections and those without. “[Borrowers] are very open to considering non-occupying co-borrowers. Before, it was something that I would introduce to the conversation. Nowadays, they are coming to me with that option already in mind,” says Yvonne Bubienko, a loan officer in Georgia. On the flipside, however, loan officers have noted that some buyers are desperate to achieve homeownership and, as such, are more prone to making bad choices. “They’re going to online lenders, with unlicensed sales reps, who don’t fully understand what they need or should be reviewing for the financial math. Therefore, many people today are making unwise financial choices due to a lack of education, which is often costing them tens of thousands of dollars,” says David Youngs, a loan officer with 20 years of experience. It’s no surprise that buyers are making poor decisions, mainly first-time buyers, given the state of the market. 69% of HomeLight survey participants — the overwhelming majority of responses — predict that first-time Homebuyers will be the demographic that struggles the most with purchasing a home in 2026. Loan officers predict that the two biggest hurdles homebuyers will face in 2026 are high home prices (43%) and saving enough money for a down payment (31%). Regardless of the struggles that most novice buyers will face, some loan officers, like Dennis Bergstrom and David Youngs, are optimistic that an influx of reduced rates will encourage some neophyte home shoppers to take the plunge. “Lower rates [will] motivate buyers who were on the fence to purchase their first home. Many see a buying frenzy with multiple offers that prop up home values,” predicts Bergstrom, who has been in the industry for over 20 years. “With rates expected to decline over time, even by the smallest amount, this may be all it takes to get many off the fence and begin the home-buying process. Online and social media will be the biggest driving force behind this,” Youngs tells HomeLight. Excessive personal debt has continued to be an albatross around the neck of Americans — a trend not expected to dissipate in 2026. When we asked loan officers to predict the top use of home equity funds in 2026, the answer was, unsurprisingly, debt consolidation — a leading response from many industry experts in the past few years. As more and more industries seek ways to use artificial intelligence technology to streamline their business operations or reduce costs, real estate has been no exception. While some use cases, such as AI-generated listings or walkthroughs, have come under fire for being poor showcases of the technology, loan officers are confident that AI tools will ultimately help streamline the application process. The real estate industry as a whole has also been quick to legitimize the use of AI. For example, real estate news and technology outlet Inman News recently announced its slate of AI-focused awards to various industry leaders, doling out praise for several categories, including Best Use of AI by a Brokerage and Best AI-powered platform. Several companies, such as HomeLight, topped the list. 50% of HomeLight survey respondents believe that AI will ultimately improve the mortgage application process, making it easier for borrowers and loan officers. As we’ve seen, lenders expect move-up buyers to do well next year. Some of the tools that our respondents expect homeowners to employ most frequently are buy-before-you-sell (BBYS) programs, with 41% of loan officers indicating that this will be the most popular form of alternative financing in 2026. “Buy-before-you-sell programs allow home shoppers to better negotiate the purchase of a new home, as well as the sale of their old one,” says Enterprise Sales Manager Richie Helali, who assists lender partners with HomeLight’s Buy Before You Sell program. “At the end of the day, it’s all about timing,” he adds. “If the average homeowner is looking to buy another property today, using a buy-before-you-sell program gives them the ability to generate a stronger offer on their current home, without the stress of wondering when they’ll make it into their next home.” Whether you’re an existing homeowner or just a hopeful would-be one, lenders agree that shoppers who wait will only find regret at the end of the line, and that the time to think about buying a home is yesterday. “Homebuyers who could have purchased a home in 2025 and are ‘waiting’ (for rates, prices, whatever), will regret not doing so before the end of the second quarter 2026,” says Arizona loan officer Steve Farrington, with 25 years in the industry. For younger borrowers who fear that homeownership is becoming out of reach, 27% of respondents say that being flexible and starting small is important. 25% agree that now is the time to create a long-term plan with the help of a professional. “Speak to a lender to make sure your finances are in order before shopping for a home. Pay off or pay down debt to put yourself in the best possible position for the new home payment. Practice making a higher housing payment by paying yourself about $500 a month, and putting it into a savings account,” advises Colorado loan officer Judy Jones, who has 27 years of experience. If you need help, don’t worry. HomeLight can connect you with a trusted real estate expert to give you the peace of mind you need to purchase your dream home, or even sell your current home. With innovative and industry-leading programs like Buy Before You Sell and Simple Sale, buying a home has never been easier, even when the market isn’t on your side.85% of lenders predict an increase in mortgage originations in 2026
Move-up buyers will do well. First-time buyers? Get a roommate
Co-buying is on the rise
Desperate buyers are taking risks
First-time buyers will continue to face a one-two punch
Despite lower rates, home prices will still be a barrier
Homeowners will pay down debt with equity
AI is primed to help, but not replace lenders
Buy-before-you-sell programs will be popular in 2026
Lenders want you to know, it’s not hopeless: Act now, be flexible, start small
