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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 18 January 2025 C O V E R S T O R Y ECONOMIC UPDATE 2025 MortgagePoint surveys a panel of economists and industry experts about where the housing market and mortgage industry will be headed in a new year and under a new incoming president. B y DAV I D W H A R T O N A s 2025 dawns, the hous- ing market and mortgage industry brace for a year of change. With a new incoming administration under President Donald Trump, the industry is preparing for how his shifting policies and priorities will impact everything from mortgage rates and affordability to the conserva- torship of the GSEs. For this year's first edition, Mortgage- Point surveyed a selection of economists and industry experts about topics rang- ing from the potential impact of tariffs and deportations on the building in- dustry, how inflation may be impacted, first-time homebuyer affordability and access, and more. This year's outlook reveals a complex interplay of factors likely to shape the housing market's tra- jectory in the months and years ahead. Molly Boesel Principal Economist, CoreLogic Q: What economic policies or changes are likely to be proposed or introduced by the Trump administration in 2025 and will have the most significant impact on the housing market, and why? Policies that work to increase the supply of for-sale housing in 2025 would have the most impact on the housing market. Low for-sale supply in many parts of the country has kept home prices high, and housing affordability is at a near-record low. While interest rates in the 6% range play a part in low afford- ability, home price increases are also a driver of low affordability and create a barrier for new buyers. Home price in- creases increase monthly payments, but they also increase the amount of down payment a buyer would need to have. Q: How do you expect interest rate policies from the Fed- eral Reserve to influence mort- gage rates, housing affordability, and demand in the coming year? The Federal Reserve has lowered, and is expected to continue to lower, the federal funds rate, but this has had a small impact on long-term mortgage rates. Long-term mortgage rates are expected to remain in the 6% range for most of 2025, which does little to allevi- ate the owner "lock-in" effect that is one driver of limited for-sale housing supply. However, lower short-term interest rates in 2025 would lower borrowing costs for homebuilders and could lead to an increase in residential construction. Q: What demographic groups—such as first-time buyers, retirees, or investors—are likely to benefit or be challenged by the predicted market condi- tions? First-time buyers, particularly young buyers, or those who haven't been able D A V I D W H A R T O N , Editor-in-Chief at the Five Star Institute, has 20 years' experience in journalism and an extensive and diversified portfolio of freelance material, with published contribu- tions in both online and print media publications. He has been with Five Star since 2017, initially serving as an Online Editor. Wharton previously worked at Thomson Reuters, a multinational mass media and information firm, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in journalism. He can be reached at David.Wharton@thefivestar.com..