Turmoil at the federal level, constrained housing supply in Massachusetts and big changes in how homes are bought and sold are all shaping up to make for an uncertain year in the local mortgage business. iStock illustration
The word of the year is uncertainty. Talk to any real estate agent, mortgage professional or title insurance firm and the response will be the same: “We’ll see.” While interest rates are always a major factor in the market, this year interest rates for mortgage loans are only part of a much larger story.
For instance, Federal Reserve Chair Jerome Powell has provided early indicators that interest rates are not likely to change much in the short term. With all the changes in leadership coming in with a new presidential administration, we’ll see whether that remains true. If it does, it is not an altogether bad thing for the housing market because many homebuyers have become accustomed to the current rate environment.
At the same time, lower interest rates always drive incremental market movement from those looking to tap home equity with a cash-out refinance, homeowners who have been waiting to downsize or those looking to buy their first home.
Uncertainty in D.C.
Changes in leadership at the federal level will also have an impact in Massachusetts.
For instance, the executive director of the Consumer Financial Protection Bureau was fired last week and newly-minted Treasury Secretary Scott Bessent was made interim head. Bessent then immediately froze activity at the CFPB, according to a widely-reported internal memo.
Though this really does not change the day-to-day choices of the lenders who have always been playing by the rules, it underscores the added uncertainty and unpredictability of our industry in the coming days.
As the new administration looks to cut spending and end the decade-long conservatorship of Fannie Mae and Freddie Mac, access to home loans could also change. While the standard customers with a W-2 job and good credit will still get access to the traditional 30-year fixed rate loan, other products such as low-down payment loans or those for investment properties or second homes could be reduced or limited in their availability. This move would be so that the two mortgage giants retain more capital and appear safer to private investors in a few years.
Given it is still early days, “we’ll see” remains the strategy of choice for many mortgage companies in the commonwealth.
Transparency in the Homebuying Process
The second trend is the evolving roles and responsibilities within the home buying process.
In March 2024, the National Association of Realtors agreed to pay $418 million to settle antitrust lawsuits alleging the policies, technology and practices of the industry were used to inflate or artificially set commissions. According to the original lawsuit that led to the settlement, these inflated commissions drove up the cost of homes nationwide.
On Nov. 26, a judge granted final court approval of the NAR settlement secured a release of liability for over 1.4 million NAR members and the participants in the settlement ranging from regional associations to large brokerages to the various multiple listing services.
For most in the real estate industry, agents have been updating their practices and disclosures since August 2024, however this year will be the first full year in Massachusetts where the new provisions and practices are in place.
To start, there are a few practical changes. Agents are using written agreements before showing potential buyers a home – this is true for virtual tours as well. Agent compensation is negotiable, as has always been the case, but where it was generally either a default compensation percentage in the contracts or a long-established arrangement between agents, it will now be determined or negotiated during each client interaction. This usually works in tandem with the written agreement to show homes.
Overall, the market has remained relatively consistent with the way homes have always been listed and sold. We’ll see.
One trend the MMBA continues to monitor is dual-licensing. Real estate agents looking to provide more value in the transaction are getting licensed as a mortgage loan originator. In response, some mortgage loan originators are licensed or are becoming licensed as real estate professionals.
While we commend anyone looking to provide better, holistic service to consumers, mortgage loan originators go through extensive training and licensing to specifically meet the high standards for compliance with Massachusetts law. Making sure these standards are met is critical to consumer protection and customer service.
Housing Supply Remains Constrained
Uncertainty abounds in the world of housing supply as well.
The cost of building materials, access to labor and ability to build remain consistent in their unpredictability this year. This is not different than many other years with, perhaps, the added volatility of the political changes that could influence home costs.
Jeremy Potter
Overall, the housing finance industry is trying to assist builders, developers and homebuyers with more flexible products that address some of the previous obstacles. Fannie Mae and Freddie Mac have made it easier to finance modular homes. HUD allowed FHA to update the manufactured housing codes and rules unlocking additional options for many new homes. Finally, banks and other lenders are expanding fix-and-flip, home renovation and home construction programs to streamline the requirements and speed up the process.
In a year of uncertainty, we’ll see whether federal changes in Fannie & Freddie flow down to the market or state level.
We’ll see whether competition, transparency or technology assist real estate and mortgage professionals in lower the cost of the homebuying process.
We’ll see whether new programs spark new types of housing for homebuyers across the commonwealth.
But one thing is certain: the MMBA and our partner trade associations have never been more ready or relevant to help our members navigate uncertainty and thrive throughout 2025.
Jeremy Potter is chief strategy officer at Silk Title Co. and the current secretary of the Massachusetts Mortgage Bankers Association.
