Featuring the perspectives of:
Shant Banosian
President, Rate
Kim Nelson
Founder and CEO, BankSouth Mortgage
What do you expect to see in the mortgage rate environment in 2026, and how might policy or Fed decisions shape consumer borrowing power?
Shant Banosian: Heading into 2026, I expect mortgage rates to stabilize in the high-5% to low-6% range as the Fed transitions from a restrictive stance to a more neutral one. Inflation has cooled, but the job market is flashing warning signings, so the Fed will remain cautious and data dependent, wanting to ensure long-term stability before aggressively cutting rates.
The real opportunity lies in spread compression, which could improve borrowing costs even if the Fed moves slowly. For consumers, that means a noticeable increase in buying power, and for lenders, an opening to re-engage both new and existing clients. The key is being ready to move fast when economic data shifts.
Kim Nelson: As we look toward 2026, we anticipate a more stabilized rate environment, potentially landing closer to historical norms rather than the extremes we’ve seen in recent years. While timing remains uncertain, the Federal Reserve’s actions in 2025 will set the tone. If inflation continues its downward trend and the economy maintains moderate growth, we could see gradual rate cuts to support housing affordability and broader lending access. However, even as rates moderate, we expect continued policy emphasis on risk mitigation and responsible lending. That means consumer borrowing power in 2026 will be shaped not just by the rate itself, but by how well lenders educate borrowers, simplify documentation and processes, and offer flexible solutions that meet them where they are.
Which loan products or financing structures do you believe will rise in popularity by 2026, and why?
Banosian: By 2026, affordability and creativity will drive product demand. Buydowns will continue leading the way, especially 2-1 and 1-0 structures, giving buyers early payment relief without hurting seller proceeds. We will also see growth in portfolio and [non-qualified mortgage] products such as [debt service coverage ratio], bank-statement and asset-depletion loans as more borrowers fall outside traditional income documentation. Second-lien and blended-rate options will help homeowners unlock equity without losing their low first mortgage. On the access side, down-payment assistance and multilingual lending platforms will expand reach to first-time and Spanish-speaking buyers.
Nelson: By 2026, borrower demand will continue shifting toward flexible and creative financing, especially among self-employed individuals, gig workers, multigenerational household buyers and renters who are ready to become first-time homebuyers, but may face affordability obstacles. We anticipate growing adoption of bank statement and alternative income loans, especially for gig workers and entrepreneurs; adjustable-rate mortgages with built-in flexibility for those who expect to refinance when rates drop; down payment assistance programs to help overcome obstacles to homeownership and address affordability issues: community-driven financing solutions that support first-time buyers and underserved markets, and renovation and construction-to-permanent financing, as inventory challenges push more buyers toward renovation-ready properties or custom builds.
How do you see the lender-Realtor relationship evolving in 2026 to better serve clients in a competitive market?
Banosian: The most successful lender-Realtor partnerships in 2026 will be data-driven, proactive and co-branded. Agents do not just need a loan officer; they need a business partner who brings tools, insights and solutions that help convert more buyers and move stale listings. That means providing instant buydown analyses, equity alerts, loyalty tracking and property marketing assets automatically and at scale. The traditional referral-for-referral model is being replaced by a shared growth model where both sides win when deals close faster and pipelines stay full. Technology will handle the automation, and human connection will handle the trust.
Nelson: We believe the most successful Realtor and lender partnerships will no longer be purely transactional. Instead, they will be strategic, responsive and deeply collaborative. Buyers will continue to expect more transparency, faster timelines and seamless communication. That means agents need lending partners who are not only efficient and accessible, but who also actively support their growth and elevate the overall client experience.