Lenders predict 2026 rebound led by refis and home equity

Nearly three quarters of lenders expect mortgage volume to improve in 2026, but their confidence is concentrated in refinancings and home equity lending.

Those expectations from the National Mortgage News Predictions 2026 survey, which was fielded online during November and December among 156 mortgage-industry professionals.

More than half, 55% of respondents, work at banks or credit unions and 41% at non-bank lenders. The remainder work at independent or specialty servicers.

Approximately 62% expect volume to increase somewhat, another 15% are of the opinion it would grow substantially. Origination activity being unchanged was the response of 17%.

How economists see the 2026 origination market

Fannie Mae's January forecast predicts originations of $2.4 trillion this year, up from $1.94 trillion in 2025. The share of refinancings should grow to 38%, from 29% last year and 21% in 2024.

Purchase volume will still make up the lion's share, at an expected $1.49 trillion from $1.38 trillion in 2025.

Perspectives on whether demand will improve in 2026 largely correlated to where respondents to the NMN survey were based, but overall more respondents predicted increase and neutral growth than those who thought it would decline.

A majority of southern and midwestern respondents said they thought demand would grow, at 57% and 52% respectively, while 23% and 29% felt it would level off. Just 17% in the South and 13% from the Midwest expect demand to decline.

The Northeast and West survey takers were more balanced in their responses. In each region, 42% said demand would improve. Level off was the response of 34% in the Northeast, with shrink at 21%; in the West, this was 29% and 24%.

"Nonetheless, life events — job changes, household formation and relocation — will continue to draw both buyers and sellers off the sidelines in 2026," Mark Fleming, chief economist at First American Data & Analytics said in his commentary for its Real House Price Index.

"That gradual life-event re-engagement should support more inventory and more sales transactions," Fleming said. "As long as inventory levels don't deteriorate dramatically because more buyers than sellers enter the market, house price growth will remain in check, allowing affordability to continue to steadily improve."

What product types do respondents expect to grow in 2026?

Responses around demand for different product types is similar to what is being seen in the Optimal Blue rate lock data.

Government-guaranteed mortgages — Federal Housing Administration, Veterans Affairs, U.S. Department of Agriculture — have the greatest expectations for growth, with 63% of the survey participants expecting that. This is followed by non-qualified mortgages at 62%. Conforming was next at 57%.

The rate lock data has conforming mortgages with the largest share at 51%, down slightly in December from the prior month and year. Nonconforming, which includes non-QM, made up 17% of December's lock volume, up 141 basis points from 12 months prior.

While FHA locks were down 209 basis points from the previous year, it still made up a healthy 18.9% of the market; VA was at 12.4% and USDA at 0.6%.

While 47% believe reverse mortgage demand will increase in 2026, 22% expected it to level off and 21% predicted less volume. This comes at a time when data indicates many seniors are planning to age in place, and could be a marketing target for a reverse mortgage.

By location, it is the suburbs where respondents had the strongest opinion where demand will increase, at 58%, while 49% predicted rural demand to grow this year and 46% for urban markets.

Products expected to see higher demand this year

While 63% of the respondents said they expect single-family demand to increase this year, in line with the increase in volume expected by Fannie Mae, the surprise might be how many people believe manufactured housing mortgage demand will grow.

Manufactured housing has been mentioned by Trump Administration officials as a tool to improve affordability, but a bill which would have eased lending on these properties was left out of the National Defense Authorization Act in December. But two weeks later, similar provisions were included in a House committee markup.

Lending on two-to-four unit properties, another way some have cited as for buyers to help afford their mortgage, was expected to increase in 2026 by 51%. In this situation, the owner-occupant has one unit and rents out the rest to help pay the mortgage.

But another type of owner-occupied property also considered to be more affordable, condominiums and cooperatives, were predicted to see an increase in demand by only 43% of the respondents. These have different lending requirements from the secondary market, including with co-ops the buyer is acquiring shares in a corporation, not a piece of real property.

Where lenders expect the increase in business to come from

An interesting dichotomy exists on the type of buyer mortgage lenders are expecting increased demand to come from. Expectations for the largest growth to come from first-time buyers, at 56%. But what can be considered an overlapping demographic, low-to-moderate income families, are not seen as a source of demand.

Just 37% of originators expect more business from this group, while 29% believe demand will decrease.

By business segment, the origination function is expected to increase by 66%. However, in what might be a pessimistic view of the U.S. economy, a similar number of respondents, 63%, said they foresee default related functions to have a demand increase.