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As mortgage lenders weigh how to integrate artificial intelligence, technology leaders are juggling the rapid pace of innovation with the need to set realistic expectations. They're finding that effective adoption depends as much on curiosity, patience and internal collaboration as it does on the tools themselves — and that buy-in from executives, compliance teams and frontline staff often hinges on answering tough, sometimes skeptical questions.Research from a survey published by Arizent, the parent company of National News places a spotlight on the conflicted views many in home lending and financial industries have on AI's speedy growth. While 69% of mortgage professionals recognized the potential it has to provide efficiencies, and 64% said it would lower costs, a near-equivalent share of 62% said the technology was generally evolving too fast for their liking.Since that time, AI development has only accelerated. Mortgage professionals, though, also seem open to testing its potential for select tasks. Technology leaders that not only respond to some of the common concerns the greatest benefits are likely to find themselves pioneering changes rather than following the crowd. "They need to be curious," said Matt Rider, a former chief investment officer at Wells Fargo Mortgage and currently owner of his own consulting firm."They need to be thinking, how can I push it? How can I really use this?" he added.  The speed of generative AI's development has tech leaders excited about capabilities that may be possible in the future, but they also recognize that what's novel today might become outdated in no time."It's going to look different a month from now. It's moving," said Steve Octaviano, chief technology officer at originations software provider Blue Sage Solutions. However quickly things change, the fundamentals of AI are always relevant, Octaviano stressed. He tells his team at Blue Sage to focus on the foundational aspects of artificial intelligence that can help solve small issues first, which will then go a long way toward understanding how the technology's future benefits."I tell lenders this as well: don't chase rainbows or the sexiest thing on the block that you hear. Just try to implement and solve a specific pain point first because you would be surprised how much you're going to learn," he said.Staying on top of today's advancements still demands ongoing self education even among the most knowledgeable advocates in the field that lenders trust for guidance. "Stuff gen AI couldn't solve two months ago  — now it does," said Ari Gross, chair and chief innovation officer at True, a technology platform providing lending automation processes to the mortgage industry."I'm supposed to stay on top of that so I can advise everyone else," Gross added. "It is true that we're advising, but it's also true that we're always learning ourselves constantly."AI sentiment varies based on specific rolesWhen companies find it's time to dive into artificial intelligence  — whether it's through the adoption of specific vendor tools or developing their own acceptable usage policies — technology teams are encountering a wide range of questions coming from those employed in the industry with different levels of knowledge and skills.Top mortgage executives' concerns diverge from what compliance leaders and rank-and-file employees are usually thinking about. "[C-suite] questions are focused on more, 'How does this technology work? What is the customer experience like? Is this effective,'" said Rishi Choudhary, CEO of voice-agent software firm Kastle.Because artificial intelligence is still in its nascent stages in mortgage, developers also need to ensure everyone involved with adoption is aware that potential technology hiccups are normal. "You're learning with your clients, and you have to be patient," Gross said.On the other hand, compliance leaders offer the toughest questions and challenges, Choudhary noted, describing them as a group that needs to understand how the processes work in order for AI to be successfully and safely deployed across the mortgage industry. "Their basic questions are very well meaning," he said. "'How do you keep my data safe? What prevents this AI from going rogue? How do you prevent against racial bias, hallucinations?'"Often overlooked in the corporate AI conversation, though, are frontline employees, who, as the technology's users, should be top of mind when developing any artificial intelligence policies or strategy, Rider said. Too many executives have a tendency to look at AI as simply a tool and not consider the long-term transformative potential, in his opinion."They're thinking it's a technology, not thinking it's actually a business practice. I think that's a barrier, because you really need to bring more people into it, and they're not right now," he said. The frontline employees, in his experience, have always been eager to learn how technology can help them do their jobs better. "A practice I've always used in what I teach and when I consult now, is to put the vision together. It could be your North Star. Then, you have to assess the skills. Do you have them? Do you need to go and develop them? That would determine your priority for training your workforce," Rider said. How mortgage lenders are determining best uses in the workplaceSome mortgage businesses that have implemented artificial intelligence have looked as much inward as to outside providers and experts to find the most effective ways to take advantage of AI. From small shops to megalenders with thousands of employees, a one-size-fits-all approach to AI won't work. Collaborative internal working groups can study specialized AI-use cases that go beyond the nuts and bolts of AI that fall in the purview of technology departments."What we're finding with AI is that it's tech, but it also transcends now into sales and marketing and operations. The team itself is looking at solutions that fulfill specific purposes, and then they're also looking at solutions that yield general productivity enhancements," said U.S. Mortgage President Scott Milner, who heads his firm's newly formed working group. The purpose of the working group is to "best understand how people are currently using some AI, whether it's large language models like ChatGPT or other solutions. And then, we need to come up with our own policies and procedures," he added.An intentional way of looking at how AI might be introduced across different divisions within a company can lead to the creation of tools, such as internal assistants that have multiplied in number across companies over the past two years. Key to adoption, though, is making any tool simple to navigate. "It was really amazing to see how quickly they were able to just go in and use the system. I think with certain solutions, it's got to feel like that," Milner said about the Melville, New York-based lender's internal guidelines tool."We rolled it out the way we roll out anything else, but you get immediate adoption when the tool is easy to use," Milner added.Collaborative learning isn't restricted just to users. Knowledge sharing among founders and developers themselves at companies like Kastle is "challenging our assumptions much faster," and contributes to the planning and revision of implementation dates, Choudhary said. "Product decisions we made six months ago — the restrictions that we made those prior decisions with might no longer be applicable," he said.  "We actually work very closely with our partners to help them understand what's possible in the two-year roadmap, but in terms of the implementation, be flexible. Don't plan more than a quarter's worth of implementation."The value in setting proper expectationsThe arrival of any potentially game-changing solution has always brought with it misunderstanding and heightened expectations, neither of which are necessarily grounded in reality, and technology leaders say AI, likewise, needs to be approached with appropriate guardrails in place. Artificial intelligence isn't intended to be a cure-all, and its effectiveness is contingent upon thoughtful human interaction to achieve successful results, they emphasize."If you're going to build a model or if you're going to build a process using AI, you need to think about your current processes, be able to articulate those but most importantly, be able to articulate what it is you're trying to accomplish. AI will fill in the blanks, but you still have to have that stated purpose," Rider said. "The biggest thing about AI deployments is that you need to bring that mindset to iterate. It's not ready day one, but it's going to be ready as you have the ability to shape it," Choudhary said.Understanding what artificial intelligence  is — and isn't — also can right-size expectations and while also mitigating risk and making it relatable for hesitant adopters."If you really dive into the science behind it, it's really a neural network. It's like a database, but it's a database that's quick and connecting dots for you," Blue Sage's Octaviano said. "It just appears like magic because it's almost giving you the answer back in the same human-based interface that you naturally understand, which is language. That scares people."While AI, when used in a controlled setting, can be trusted, the businesses still need to recognize that output needs to be verified no matter where it comes from. "It needs adult supervision, because at the end of the day, nobody is really thinking there," Gross said.

Optimal Blue is undergoing a rebrand, what the company termed as its first major refresh since it was founded in 2002.Since that time, the product and pricing engine provider was first acquired by Black Knight in September 2020; it was sold three years later to Constellation Software in order for Intercontinental Exchange to purchase Black Knight.(In a separate transaction which was also required for the deal to go through, Black Knight sold the parent of its Empower loan origination system, now branded as Dark Matter, also to Constellation.)Optimal Blue has a new logo, with blue being the primary color as opposed to orange. The font has also changed and is all-caps as opposed to all small letters. "We continue to invest in AI and innovations that help our clients stay accurate, move faster and make smarter, more informed and profitable lending decisions," said Joe Tyrrell, CEO, in a press release. "At the same time, we're building on more than two decades of trusted expertise, performance and unrivaled pricing accuracy."What is Optimal Blue's new marketing tag lineThe new tagline is "Modern. Proven," with the company stating it represents its dual promise of being innovative and experienced in the capital markets."This new brand is more than a visual update — it's a bold statement about who we are and where we're going," said Sara Holtz, chief marketing officer. "Our visual identity and messaging not only reflects all the changes and enhancements that we have recently made, but also the fact that Optimal Blue delivers the best of both worlds: modern technology and decades of trust."While the new branding is being implemented immediately, the company expects to have all the updates around it completed in early 2026.Other recent mortgage businesses who've rebrandedOptimal Blue isn't the only mortgage-related business to undergo a marketing refresh or even a name change in the past few months.Rocket redid its logo and acquired the Rocket.com URL. On the name-change front, Corelogic recently became Cotality.Fairway Independent Mortgage did a name change as well, swapping out its middle name to become Fairway Home Mortgage.On July 1, FBC Mortgage rebranded as Acrisure Mortgage, taking the name of the company who acquired it in 2022.

Forty-one former employees of Fannie Mae on Wednesday sued the company, its chief executive and Federal Housing Finance Agency Director Bill Pulte for alleged defamation related to their dismissals in April.The ex-employees of the government-controlled mortgage giant are seeking damages amounting to more than $2 million per person, according to complaints filed in Fairfax County Circuit Court in Virginia, which were distributed to the media by their lawyers. READ MORE: Fannie Mae faces bias suit after mass firing over fraudThe FHFA and Fannie Mae did not immediately respond to requests for comment.Fannie announced in April that more than 100 employees had been removed "for unethical conduct, including the facilitation of fraud." In a Fox News interview the following day, Pulte said an investigation found that workers were making donations to "the internal company charity" and then getting kickbacks.The legal challenge comes as the Trump administration is weighing a sale of shares in Fannie Mae and Freddie Mac, targeting an offering as early as this year at a valuation that would raise about $30 billion for the government.READ MORE: President Trump envisions November launch for mortgage IPO The dismissals have been linked to alleged violations of Fannie's matching gift program, which matches employees' charitable donations to "a cause or organization of their choice" of up to $5,000 annually. Three Democratic lawmakers questioned the mass termination of mostly Indian-American employees around the time it was announced. Representative Suhas Subramanyam joined two House colleagues in writing an April letter to Pulte and Fannie's CEO Priscilla Almodovar. The lawmakers expressed concern that participation in the program and donations to Indian-American organizations "may have been used as a pretext to make indiscriminate cuts to Fannie Mae's workforce and to tarnish employees' reputations" without proper investigation. READ MORE: Fannie, Freddie change rules for contributions, incentivesThe complaints filed in Fairfax said that the former employees were summarily ousted by email and phone, and "despite multiple requests" have never been given any evidence to support the claims against them. It's not the first lawsuit to emerge from the mass termination. Last month, another complaint was filed in the District of Columbia by 66 of the former employees, all of Indian descent, alleging that the removals amounted to discrimination based on national origin and age.

Foreclosure rates climbed across the country in July, a sign that high home costs may be starting to catch up with homeowners.Lenders and banks moved to foreclose on 36,128 homes nationwide in July, an 11% increase from last month and a 13% increase from the same time last year. One out of every 3,939 homes had a foreclosure filing — which Attom defines as a default notices, scheduled auctions or bank repossessions — for a rate of .025%.A number of factors may be contributing to the rise, including an end to relief for FHA borrowers, the Department of Education resuming collection of defaulted student loans, and an increasing number of borrowers finding themselves underwater in their mortgages. There has also been a spike in foreclosures on loans backed by the Department of Veterans Affairs this year after a moratorium ended last December, though a recent law extending new protections for borrowers will likely temper this going forward.Property prices are another issue that's proving to be a double-edged sword."While rising home prices are helping many owners maintain equity, the steady climb in filings suggests growing pressure in some markets," said Rob Barber, Attom's CEO, in a statement. Some borrowers are taking advantage of record-high equity to apply for HELOCs and cash-out refis. But for others, especially those with adjustable rate loans that are set to change soon, rising home values only add to the burden of the high property taxes and insurance premiums they've been bearing.This may just be the beginning, too. Foreclosure starts were up 12% in July year-over-year, according to Attom. Data this week from ICE Mortgage Monitor found similar results, with the delinquency rate rising 15 basis points in June to 3.35%.Where are we seeing the most foreclosures?Nevada led the way with one out of every 2,326 housing units in foreclosure, while Florida was right behind with one in every 2,420 properties. Maryland, South Carolina, and Illinois rounded out the top five.States in the South, West and Midwest saw the highest levels of foreclosure starts. Texas was the top, with lenders initiating foreclosure on 3,600 properties, while Florida and California saw about 2,800 foreclosure starts each. Illinois and Ohio trailed behind that.Many of these areas have faced difficult housing markets this year. In Florida, condo sales are down as much as 30% in some areas, according to Redfin, a result of falling demand even as some owners try to unload their properties to avoid rising insurance and HOA costs. Texas and California have also seen softening – and in some places, falling – home prices. For instance, ICE found that home prices are down 2.1% in Dallas and more than 4% in Austin compared to a year ago.More foreclosures also mean more auctions – though notably, not necessarily more bidders. In a report last month, Auction.com noted that even as auction activity ticked up, the number of sales actually fell to a 30-month low. This was due in part to wariness among buyers that the market had not yet reached its bottom and that prices could continue to fall in the near future.

Tailwinds behind the non-qualified mortgage segment are leading to growing secondary market volumes, while loan pools are on par with recent performance levels, according to a new Morningstar DBRS report. Second-quarter non-QM volumes exceeded last year's number, totaling over $9.8 billion of typical securitizations, the ratings agency said in a new report. On a year-over-year basis, the number surpassed 2024's second-quarter volume of $9.4 billion.  "Volume in Q2 2025 continued Q1's brisk pace as 2025 continues on track to be bigger than 2024," the report said. While delinquencies showed mixed results, overall performance raised no alarm bells.  "Structural performance across virtually all deals in the non-QM sector remained on-trend as deal-level losses stayed very low, helping to continue the increase of credit enhancement levels," the report said. Non-QM prepayments and delinquenciesPrepayment speeds grew during the quarter by approximately 2.5 percentage points from three months earlier to a 13.49% conditional rate. The increase occurred despite the absence of significant mortgage rate movements, which stayed within a narrow 20 basis point range between April and July. Meanwhile, delinquencies of more than 60 days eased quarter over quarter to 3.6%, down 18 basis points, but up 75 bps from the same time period in 2024. At the same time, the weighted average of non-QM delinquencies overall fell 51 basis points to 5.69% between first and second quarters, in line with trends seen across all types of residential mortgage-backed securities, Morningstar said.  "Non-QM DQ rates continue to be nominally higher than those of conventional/conforming and prime credit RMBS, as expected given non-QM's intrinsically greater credit risk," it added. By comparison, average delinquency rates for prime credit pools came in at 0.92% during the quarter. For credit risk transfers offered by the government-sponsored enterprises, the benchmark delinquency rate came in at 1.54%. The non-QM market is seeing diverging results based on when pools were collaterized, though, with vintages from 2023 and 2024 more likely to exhibit higher rates of delinquency and lower prepayment speeds. The latest data arrives as lending leaders anticipate increased non-QM volume for the next several months, with a growing number of potential clients with nontraditional wage sources. At the same time, regulatory deescalation coming out of the nation's capital as well as a potential transaction to take the GSEs public would likely drive changes to spur non-QM demand.  In 2024, non-QM originations accounted for an approximate 5% share of all mortgage originations, according to data from Cotality. Morningstar attributed recent favorable trends for non-QM issuances to a "modestly mixed, but not deteriorating, macroeconomic environment." Home price and interest rate trends for the housing market, meanwhile, continued to limit growth in conventional and government-backed mortgage originations, with non-QM increasing proportionally relative to overall lending volumes, it said.

The Federal Housing Association is likely to continue to take market share away from the private mortgage insurers for the foreseeable future, a Keefe, Bruyette & Woods report said.Insurance-in-force for all forms of mortgage insurance grew by 1.3% between the first and second quarters and by 5.5% year-over-year, the report from Bose George and Tommy McJoynt said.However, FHA had 9.7% annual growth, versus just 1.6% annual growth for the private MIs, continuing a trend since mid-2023. When compared with the first quarter, FHA's IIF increased 2.3%, while it only rose by 0.4% for the private MIs.Dollar amount of loans with mortgage insuranceFor all forms of mortgage insurance, IIF is $3.14 trillion, with the private companies holding $1.59 trillion of the total.PMI is mostly used on conforming mortgages, with $1.4 trillion of its IIF on Fannie Mae and Freddie Mac loans, U.S. Mortgage Insurers said.The share of PMI relative to FHA has declined 440 basis points since the third quarter of 2022, to 50.7% of the market, from a peak of 55.1%."We expect PMI IIF growth to remain muted through 2027, reflecting the slow recovery in the housing market," the KBW analysts said.How many consumers used PMI last yearUSMI annual data showed use of its members' product has slipped in line with total mortgage origination volume.In 2021, nearly 2 million borrowers used private MI; for the same year, industry volume was $4.4 trillion, according to the Mortgage Bankers Association.The number of private-MI-using borrowers fell to 1 million the following year and to around 800,000 in both 2023 and 2024. Originations in those years were $2.25 trillion, $1.64 trillion and $1.78 trillion respectively, MBA said.Insurance-in-force at the PMIs rose by 8.1% before falling to 2.9% and then 1.9% over that same time frame, the KBW report noted.Why FHA will grow faster than private MI"We expect FHA growth to outpace PMI growth in a higher-for-longer environment as FHA volume continues to benefit from affordability-related factors such as more volume from some large builders and GSE-to-FHA cash-out refinance debt consolidation volume," George and McJoynt noted.The July MBA forecast predicts the 30-year fixed will average 6.7% in the fourth quarter, before falling to 6.6% in the first quarter of next year and ending 2026 at 6.4%. For 2027 it expects the 30-year to average 6.3%.In July, KBW reduced the ratings on three of the five private MIs it covers (Radian, Essent and NMI Holdings) and now sees their respective stock prices as "market perform." Arch is covered separately as it has other lines.But the analysts still remain bullish on the business in general going forward. Each of the companies remained profitable during the second quarter.How much will private IIF grow through 2027?For this year, KBW predicts the private MIs IIF will grow by 2%, with 3% increases in each of the following two years. The MBA origination outlook is for $2 trillion this year, $2.2 trillion in 2026 and $2.3 trillion in 2027.The restoration of the mortgage insurance premium deduction should not have create any meaningful shifts in market share, as it is an across-the-board action, covering not just PMI and FHA, but also other government-guaranteed products including Veterans Affairs and U.S. Department of Agriculture mortgages.But one potential disrupter for the MI companies is the Federal Housing Finance Agency's pronouncement that conforming lenders can use VantageScore 4.0 on loans sold to the GSEs. The MIs have to adapt their systems to underwrite these loans, just as lenders will.

If you’re hoping for lower mortgage rates, you might be thrilled to hear what Treasury Secretary Scott Bessent has to say.During a television interview today, he said “a series of rate cuts” could be on the table, including a big 50-basis point cut in September.That would mirror the cut seen last September when mortgage rates happened to go up. Of course, the Fed and mortgage rates have a complicated relationship.So those who think Fed cut = lower 30-year fixed might be in for a surprise.However, Bessent added that the September cut could be the first of many…Bessent Says Rates Should Be 150 to 175 Basis Points LowerSpeaking today on Bloomberg, Treasury Secretary Bessent argued for bigger rate cuts than what’s currently forecast.For starters, he believes the September Fed rate cut, currently a lock at 99.9% on CME, should be not 25 basis points but instead 50 basis points.The backdrop there is that he suspects we could (should) have cut back in June and July, but didn’t. So in essence playing a little bit of catch up.Of course, this is all predicated on that really ugly jobs report we got for July, which included massive downward revisions for June and May.Had that not come, it’d be hard to fathom anyone talking about a 50-bp rate cut, or perhaps even a 25-bp rate cut.In fact, CME had odds of a quarter-point rate cut at just 57.4% one month ago, just to illustrate how fluid this all is.Now there’s word of removing the monthly jobs report until it can be proven to be accurate.This was a suggestion from E.J. Antoni, who replaced fired Bureau of Labor Statistics (BLS) commissioner Erika McEntarfer after that mess of a report.But Bessent believes that’s just the start, and that “we should probably be 150, 175 basis points lower.” Whoa!The Fed Funds Rate Isn’t Mortgage RatesI’ve said this a million times, but it bears repeating. The Fed doesn’t set consumer mortgage rates.When they cut, mortgage rates could go up, sideways, or down. Same if they hike. The correlation isn’t all that strong.The only real argument you can make is Fed rate expectations correlate somewhat with mortgage rates.So if they’re planning to cut, long-term mortgage rates can drift lower too. But, and it’s an important but, you need the economic data to support the move lower.While the Fed could feasibly cut its own fed funds rate, it’s unclear how bond yields would react, especially without a monthly jobs report leaving them in the dark.Bonds are supposed to be a safe haven, and with so much uncertainty in the air, it’d be hard to imagine any major movements there until there’s more clarity.However, the 10-year bond yield did slip nearly six basis points today, which might be a reflection of reduced inflationary fears related to tariffs.That would put all eyes on the labor market, which is what got this latest mortgage rate rally going in the first place.And could be the underlying reason why folks like Bessent are calling for these sizable rate cuts.Is Bessent signaling that not all is well in the economy, even if the administration argues that the economy is hot?Ultimately, continued job losses and higher unemployment is what would get mortgage rates even lower.It’s clearly a double-edged sword, as you’d have more households under stress, which kind of takes away from the expected windfall of lower rates.But that’s kind of the thing with rates. They tend to come down with bad economic times and vice versa.Mortgage Rates Already Lowest Since Early OctoberAs it stands now, 30-year fixed mortgage rates are the lowest they’ve been since early October. They’re nearly back to September levels, per MND.So Fed rate expectations and weak economic data might already be mostly baked in. Rates can go lower, but need a reason (even more economic weakness).Maybe they’ll get back there this September, when the 30-year fixed was hovering closer to 6% than 6.5%.That would certainly lead to a pick up in mortgage refinancing, and potentially home buying as well.We saw a mini refi boom back then, which only got cut short due to a hot jobs report, ironically.Perhaps we are unwinding that move a year ago and getting back to the narrative that the labor market is cracking and the economy is cooling.All this despite fears of inflation rising again due to tariffs, or simply more businesses raising prices as they manage rising costs.This is where that stagflation idea comes in. Slowing growth, higher unemployment. It’s certainly possible.But it appears this administration, who is also looking to make the Fed a lot more accommodative once Powell’s term is over, is fixated on cutting rates.If nothing else, this means HELOC rates will come down, as they are directly tied to the prime rate, which is dictated by the federal funds rate.It could also make adjustable-rate mortgages cheaper, as they are short-term loans unlike the 30-year fixed.The big question is if this policy direction puts us at greater risk of inflation reigniting. Or if the administration sees the writing on the wall, that the economy is in dire need of support. Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.Latest posts by Colin Robertson (see all)

Young homebuyers are taking the adage "marry the house, date the rate" to heart, but that could set them up for potential problems in the future, a new report warns.Nearly two-thirds of millennial and Gen Z homebuyers said it was "important" or "extremely important" that they be able to refinance their homes in the next three years, according to a new survey from Truework, an income and employment verification website. That compares to 56% of all homebuyers and is double the number of baby boomers who said they would need to do so.Millennials and Gen Z homeowners appear to have a higher risk tolerance, often accepting less-than-ideal mortgage rates with the intention of refinancing later.This could be a risky decision, though, said the report's authors. For one, the market is unpredictable, and there's no guarantee that rates will go down significantly or that other costs won't go up. For another, homeowner finances change. Borrowers may lose their job, see their pay cut, or run into credit problems between the first loan and the refinancing."When I consult clients about a refinance, I always tell them, 'know the numbers,'" said Todd Carson, director of sales performance at Planet Home Lending. "A 1% rate reduction may serve as a broad benchmark, but in practice, every homeowner's financial picture is unique."Many homebuyers are also blindsided by unexpected costs, the survey found. Nearly a quarter of respondents said they were surprised by the extent of the "other costs in the process," such as inspections and closing costs. These struggles continued even after they left the closing table, with 17% saying that their biggest financial difficulty was paying for "unexpected repairs." This issue was most pronounced for Gen Z and millennial buyers.Besides closing costs and repairs, rising insurance rates are also weighing on household budgets, with the average homeowner's insurance premium spiking more than 9% since last year. In a survey of homeowners, 57% said they would consider selling their home if insurance rates rose.The Truework report pointed to "industry-wide communication failures" in helping first-time homeowners, especially younger ones, understand the true costs and risks that come with buying a home. They raised a red flag regarding the increasing tendency for younger buyers to rely heavily on refinancing. The authors warned this could create "systemic vulnerabilities" that could have broader economic implications.Hope for new homebuyersWhile fears around affordability weigh heavily on the minds of younger homebuyers, new data from the National Association of Realtors offers some hope.While home prices rose in 75% of markets nationwide in the second quarter of this year, this is down from the first quarter, when prices rose in 83% of markets, according to the NAR's Housing Affordability Index. The median price of a single-family home moved up 1.7% year-over-year, a slowdown from last quarter when prices increased 3.4%.There were huge regional variations in this, though. In the Northeast, prices were up more than 6%, triple the nationwide average. The West, meanwhile, saw only a slight bump of 0.6%, and in the South, prices remained flat. This tracks with other recent reports which found that increasing supply and falling demand have led to cooling home prices in these regions."Home prices have been rising faster in the Midwest, due to affordability, and the Northeast, due to limited inventory," said NAR chief economist Lawrence Yun in a statement. "The South region – especially Florida and Texas – is experiencing a price correction due to the increase in new home construction in recent years."Data also shows that first-time buyers are paying 6% less in mortgage payments than they were a year ago for a starter home, and many are also spending a smaller percentage of their income on their mortgage.

US mortgage rates dropped last week by the most since February, enticing homeowners to step up refinancing.The contract rate on a 30-year mortgage declined 10 basis points to 6.67% in the week ended Aug. 8, according to Mortgage Bankers Association data released Wednesday. The rate on a 15-year mortgage retreated below 6% for the first time in four months — matching the lowest level since October.READ MORE: Economists now leaning towards September Fed cutMortgage rates tend to track moves in the Treasury market, and the yield on the 10-year note tumbled at the start of the month in the wake of weak employment data. That report, which included downward revisions to prior months, boosted the odds that the Federal Reserve will lower interest rates next month.MBA's measure of refinancing jumped 23% from the prior week to the second-highest level since early October. The index of home-purchase applications rose a more modest 1.4%.A sustained decline in home-financing costs would help breathe fresh life into a struggling housing market. However, stubbornly high mortgage rates and steadily rising home prices have buffeted a resale market where purchases are hovering near 15-year lows. For first-time homebuyers, the National Association of Realtors affordability index is near the lowest in records back to 1986.READ MORE: Mortgage rates drop to lowest level this summerThere are, however, indications of modest relief in the housing market. According to real estate brokerage Redfin, the income needed to afford a home has declined in 11 of the 50 most populous US metropolitan areas compared to last year.Builders, meanwhile, are using a variety of incentives to help reduce a multiyear high in new-housing inventory.The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.

While more economists surveyed in August by Wolters Kluwer expect the Federal Open Market Committee to cut short-term rates at its September meeting than the previous month, a significant share still thinks action won't come until December or later.The percentage of the participants in the Blue Chip Economic Indicators panel believing the next Fed Funds Rate reduction will take place in September grew to 60% from 55% in July's survey. In the July survey, one respondent forecast a rate cut at that month's meeting. The FOMC is next scheduled to meet on Sept. 16 and 17, with future meetings on Oct. 28 and 29 and Dec. 9 and 10.How many economists think the Fed will waitWhile 7% are now of the opinion the cut will take place in October, 26% think it will occur at the December meeting and 7% responded "later."Last month's survey had 10% expecting a cut in October and 33% stating it would happen later.Nearly all of the panelists are looking at a 25 basis point reduction, with just 2% stating it would be a 50 basis point cut.While the report notes some "downward surprises" were found in "certain economic data" over the prior month, the BCEI showed little change in response.What is the impact of tariff policyIf anything, "the outlook brightened slightly in some respects," Wolters Kluwer said. "The modest change in the outlook probably reflects sharp adjustments that had been made in earlier months when concern about Pres. Trump's reciprocal tariffs was deep."Participants likely were of the opinion that they already built in sufficient downside risks on the economy and upside risks on inflation into their individual forecasts, the report continued.How the CPI news influences the chances of a rate cutThe survey, released on Aug. 11 was taken prior to the release of the Consumer Price Index data on Tuesday. The report from the Bureau of Labor Statistics found the seasonally adjusted month-to-month increase to be 0.2% and the unadjusted annual rise of 2.7%."The upshot of these numbers is that the bet on a September cut by the Fed jumped to over 90% from less than 84%, and the bet for another cut in October jumped to 62%, and for three cuts by year's end is now over 48%," Louis Navellier, an investment banker, said in a commentary on Tuesday morning.Following the CPI news, the 10-year Treasury yield, which is a benchmark for mortgage rates, was at 4.3% as of 12:30 p.m. eastern time., a gain of 3 basis points from its previous close. The 10-year has been trending higher again since closing at 4.2% on Aug. 5.How much will the Fed cut rates this yearThe consensus for the decline in the FFR is 51 basis points in the August BCEI survey, which is a 4 basis increase versus July's 47 basis point expectation.Even with the continued noise from President Trump and others in his administration about the future of Fed Chair Jerome Powell, 86% of the economists are of the opinion he will remain through the end of his term.When asked if the U.S. is likely to have a recession in the next 12 months, 40% of the panelists responded in the affirmative.Nearly all the panelists have included the tax bill and its implications in their forecasts. Just more than half, 55%, believe the legislation is simulative to the U.S. economy, with another 34% stating it would have a neutral effect. Just 11% feel it would restrict economic growth.