Welcome to the end-of-year Crystal Ball reality check-in! Here is a peek behind the scenes as an originator … many magazine articles (including this one for Scotsman Guide) are written well in advance. This one was drafted just before the end of summer.
The reason that’s important to mention is so readers can look back on the mid-summer forecast to see if it was correct. By cross-checking the projected path of the “weather system” after it has already run its course, we can note which forecasts were sound — and which petered out.
There’s a second reason for this exercise as well. It helps fill the sales funnel.
Making forecasts isn’t about being “right” for the sake of it. It’s about showing the logic and insight behind predictions. Compare it to weather forecasting: Even when the National Oceanic and Atmospheric Administration runs multiple supercomputers with dozens of models, there’s no guarantee every prediction will hit perfectly.
The same is true for housing and mortgage markets, which involve countless inputs — inventory, rates, consumer behavior and assorted macroeconomic factors. Providing partners and clients with a framework for understanding what’s likely to happen enables them to operate with confidence.
When asked to gaze into their crystal balls, most loan officers hear two core questions: “What will happen to home prices?” and “What will happen to mortgage rates?”
Forecasting home prices
The U.S. median home price reached a record $432,700 as of July 2025. The late-summer 2025 crystal ball predicted the median price will have declined at least 6% now at year-end.
Simple seasonality supports much of that forecast. Over the past decade, from summer highs to winter lows, national home prices have declined an average of 5.26%.
Equity cushion could be seen as another justification for this prediction. As of the second quarter of 2025, homeowners held an average of 72.2% equity, the highest levels since before 1959, when Dwight D. Eisenhower was president and Bobby Darin was crooning “Mack the Knife.”
“Forecasts help position loan officers as trusted advisers rather than simple transaction facilitators by establishing economic context.”
Strong equity cushions insulate homeowners against short-term price declines. By way of analogy, a gambler playing blackjack with a steadily growing stack of chips should not worry about losing a hand or two because the gambler remains ahead overall.
If that gambler came to the table in late 2012 with a stack of chips (read: median home price) of $251,700, which then grew to roughly $410,800 by mid-2025, even “losing a few hands” with market dips or a price reduction when the house is sold leaves the gambler (homeowner) comfortably “winning” with the stack of chips at $380,000.
This context matters for both buyers and sellers, as overall housing market confidence remains high despite minor short-term corrections.
Forecasting mortgage rates
In late August, average 30-year fixed mortgage rates were around 6.5%. The prediction at the time of authorship was that mortgage rates would end the year at roughly the same level. Historical data supported that forecast, even with the expected 50-basis-point reduction to the Federal Reserve’s benchmark borrowing rate, because expectations are priced in.
Mortgage rates reflect future market assumptions. In August, there was already a 75% probability that the Federal Reserve would make multiple rate cuts by the end of 2025. If expectations are met, the reaction is muted. Deviations are what drive volatility, causing nervousness or excitement among borrowers and lenders.
Another reason for this prediction is supply pressure on U.S. Treasury securities. Mortgage rates are influenced by the broader bond market, particularly Treasury bonds. To fund widening federal deficits, the Treasury is issuing increasing amounts of short-term bills. Oversupply pushes yields higher, which in turn raises the expected returns for longer-term bonds. Mortgage-backed securities track those yields closely, meaning rate relief from expected Fed cuts may be largely offset by market dynamics.
In other words, markets focus purely on money, not political divides. If President Donald Trump’s “One Big Beautiful Bill” requires Treasury bonds to fund it, the markets aren’t pro- or anti-Trump. Politics does not drive Treasury yields. Supply and demand does.
Why forecasts matter
Whether or not forecasted events materialize is irrelevant. Forecasts help position loan officers as trusted advisers rather than simple transaction facilitators by establishing economic context.
This approach aligns with findings published in the book “The Challenger Sale” by Matthew Dixon and Brent Adamson. Their study of more than 6,000 sales professionals identified five types of operators: hard workers, relationship builders, lone wolves, reactive problem solvers and challengers. Here’s how Dixon and Adamson defined each:
Hard workers consistently put in extra effort, show persistence and are self-motivated. However, they may lack the strategic edge needed to stand out in competitive, complex sales environments.
Relationship builders focus on trust, rapport and long-term connections, but they can shy away from constructive tension or challenging customers when necessary for driving decisions.
Lone wolves deliver results independently, often with strong intuition and creativity. However, they are difficult to manage, difficult to scale and may resist team processes or collaboration.
Reactive problem solvers respond to customer needs efficiently, handle details meticulously and ensure issues are resolved, though they may struggle to proactively influence outcomes or drive larger strategic opportunities.
Challengers teach, tailor, create constructive tension, challenge assumptions and drive meaningful change while providing valuable insights and guidance to clients and partners. They are viewed as subject matter experts. They’re known as the professors of the mortgage industry.
In complex industries like mortgage lending, challengers dominate. They make up roughly 40% of top performers, consistently outperforming other types.
Forecasting in mortgage markets is not about making perfect predictions. It is about explaining logic, synthesizing multiple data points (like supercomputers running countless models) and providing actionable insights. Loan officers who share well-reasoned forecasts build credibility, strengthen referral relationships and position themselves as knowledgeable guides in a complex industry. They are the challengers.
By focusing on teaching and insight rather than simply being “right,” originators can add lasting value to clients and partners alike. In doing so, forecasting translates to more leads and clients in loan officers’ sales funnels.
