What the MBA’s latest forecast is signaling
The Mortgage Bankers Association (MBA) recently updated its outlook for the U.S. economy, projecting slower growth of about 1.6% in 2025 and putting the chance of a recession in the next 12 months at 35%. Translation: the economy may keep moving forward, but at a cautious pace—while inflation pressures and interest-rate policy continue to shape borrowing costs.
For homebuyers and homeowners, this kind of forecast matters because mortgage rates don’t move in a vacuum. They respond to inflation expectations, Federal Reserve policy, and investor demand for bonds. When growth slows and recession risk rises, the housing market can shift—sometimes quickly—affecting affordability, inventory, and the strategies that work best if you’re buying, selling, or refinancing.
If you’re buying: affordability and timing matter more than ever
In a slow-growth environment, many buyers hope rates will drop. That can happen if inflation cools and markets price in fewer (or future) rate hikes. But there’s rarely a straight line down, and even modest rate changes can impact monthly payments significantly.
What this means for buyers in the near term is a “two-lane” market: some areas may stay competitive due to limited inventory, while others could see more negotiating power shift toward buyers if demand softens. If recession odds rise, lenders may also become a bit stricter with underwriting, making it even more important to be well-prepared.
Buyer takeaway: focus on what you can control—budget, credit, down payment, and loan structure—so you’re ready whether rates drift down or bounce around.
If you’re selling: pricing strategy and presentation become key
Slower economic growth can translate to slower buyer urgency. That doesn’t mean you can’t sell—it means pricing and condition matter more. When mortgage rates are elevated, buyers are payment-sensitive, and overpriced homes tend to sit longer, prompting price reductions that can cost more than pricing correctly from the start.
On the other hand, if rates ease at all, more buyers may re-enter the market, and well-positioned listings can benefit. Sellers who are also buying their next home should consider how rate changes affect both sides of the move: you might sell a bit lower than peak, but also potentially buy with less competition.
Seller takeaway: prepare for a market where strategy wins—strong photos, thoughtful updates, and a realistic list price can make the difference between “sold” and “stale.”
If you’re refinancing: it’s not just about chasing the lowest rate
With inflation and rate policy still in play, many homeowners are watching for refinance opportunities. If rates decline, you may be able to lower your payment or shorten your term. But even before a major drop, refinancing can still make sense in certain situations—especially if it improves cash flow or helps you meet a specific goal.
Refinancing is also about the break-even point (how long it takes monthly savings to cover closing costs) and your timeline in the home. In a slower economy, homeowners often prioritize stability: predictable payments, consolidated debt (when appropriate), or access to equity for renovations that improve livability and value.
Refi takeaway: the “right” refinance is the one that fits your plan, not just the headline rate.
Practical moves to consider right now
Whether you’re buying, selling, or refinancing, a slow-growth forecast with meaningful recession odds is a reminder to plan carefully and keep options open. Here are a few steps that can help:
- Get a fresh pre-approval (not just a pre-qualification): it strengthens your offers and clarifies your true budget.
- Explore rate protection tools: ask about temporary buydowns, discount points, and rate locks that match your timeline.
- Run scenarios, not guesses: compare payments at multiple rate levels and home prices to understand your comfort zone.
- Consider the total cost of ownership: taxes, insurance, HOA dues, and maintenance can be as important as the interest rate.
- If you’re selling, review local data weekly: days on market, price reductions, and recent comps matter more in a shifting environment.
Economic forecasts don’t predict your personal outcome—but they can help you make smarter decisions. With growth projected to be modest and uncertainty still present, the best approach is to stay informed, stay prepared, and choose a mortgage strategy that supports your goals.
Ready to explore your options? Schedule a free consultation with our team today!