Macroeconomic Headwinds & Opportunities in the Mortgage Market: A Recap of the February 2026 Market Pulse

Highlights:

• The U.S. economy is experiencing a "K-shaped" normalization, where growth is concentrated among higher-income segments, while investment in AI infrastructure serves as the primary tailwind for overall business growth.
• Mortgage lenders are navigating a transition to a more competitive credit landscape with the adoption of VantageScore® 4.0, which, combined with strategic automation, could help reduce high loan fallout rates (nearly 45%) and confidently expanding credit access.

The U.S. economy and housing markets are entering a pivotal phase. With a backdrop of economic headwinds and a shifting regulatory environment, mortgage lenders are facing a complex task: expanding access to credit while managing rising costs and operational risks in a challenging market. 

During the February Market Pulse webinar, Dr. Amy Crews Cutts, President and Chief Economist at AC Cutts & Associates, provided a deep dive into the biggest macroeconomic factors impacting today’s environment. 

Additionally, Joel Rickman, GM and SVP of U.S. Mortgage and Verification Services at Equifax, and Robert Zimmer, External Affairs Consultant for Community Home Lenders of America (CHLA) engaged in a mortgage industry-focused discussion centered on the current affordability challenges and the evolving conversation around credit scoring and risk. 

Macroeconomic Update: A Resilience Amidst Change

Dr. Amy Crews Cutts, President and Chief Economist at AC Cutts & Associates, provided an analysis of the broader economic factors influencing consumer behavior and market stability. While headline growth remains positive, the underlying data reveals significant dispersion across household segments.

1. The "K-Shaped" Normalization: While GDP YoY growth remained steady in 2025 at approximately 2.1%, the economy is sharply divided. Higher-income households continue to drive growth through asset appreciation, while lower-income segments are increasingly strained by "sticky" costs like food, utilities, repairs and insurance.

2. Tax Refund Resilience: Households are projected to receive an additional $100 billion in tax refunds this filing season. This liquidity is expected to provide a temporary "buffer" for consumer spending and could support entry-level homebuyer activity in the spring.

3. A "Frozen" Labor Market: We are currently in a "low-hire, low-fire" environment. While unemployment remains low, job growth has slowed, with only about 50,000 to 60,000 jobs being added per month with these gains largely concentrated in a few sectors like healthcare, and worker anxiety regarding long-term security is reaching levels typically reserved for economic downturns. 

4. Monetary Policy Equilibrium: After several rate cuts in 2025, the Fed held rates steady in early 2026. Inflation is normalizing toward 2.7%. However, the "higher for longer" shadow continues to limit housing inventory as homeowners remain locked into lower historical rates. Future rate cuts are possible but depend entirely on whether inflation continues to cool or if fiscal stimulus and heightened trade costs cause a reacceleration.

5. AI as the Growth Engine: Investment in AI infrastructure is currently the primary tailwind for the economy. For businesses, the focus is shifting from "AI hype" to operational implementation—using the technology to move from routine monitoring to decision-driven roles.

Mortgage Discussion: Re-engineering for the Modern Borrower in Today’s Market

Joel Rickman, GM and SVP of U.S. Mortgage and Verification Services at Equifax, and Robert Zimmer, External Affairs Consultant at Community Home Lenders of America shifted the focus to the practical challenges facing mortgage lenders today and what lenders should know in 2026 and beyond. 

1. The End of the Scoring Monopoly: The industry is rapidly transitioning toward a more competitive credit landscape. The adoption of VantageScore® 4.0 is allowing lenders to utilize trended data and alternative insights (like rent and utility payments) to score consumers who were previously "invisible" to traditional models, supporting strategic and responsible growth. By incorporating this data, lenders can confidently score a larger universe of consumers, particularly first-time homebuyers and Gen Z.

2. Solving the Fallout Crisis: Lenders currently face fallout rates of nearly 45%. The "secret sauce" for 2026 is strategic automation—leveraging intelligent workflows to wait until a loan is committed before pulling full verification records, thereby minimizing unrecouped manufacturing costs.

3. Mortgage Rate Stagnation: Despite Fed rate cuts, mortgage rates have not dropped significantly. This is largely due to wide spreads between 10-year Treasury yields and mortgage rates, driven by investor caution and high secondary market costs.

4. Risks of the "Single Bureau" Proposal: While cost-cutting is a priority, Zimmer warned against proposals to move to a single-bureau credit pull. Missing critical data from even one bureau could lead to "putbacks" or repurchase demands from GSEs, which can be financially devastating for smaller community lenders.

5. The "All-In" Cost of Homeownership: Beyond interest rates, the pair discussed how rising insurance premiums and property taxes are creating a new ceiling for affordability. These "hidden" costs are increasingly becoming the primary barrier for millennials and Gen Z entering the market.

Keep Your Business Goals Within Sight

We hope you will join us for our next Market Pulse webinar. To ask questions in real time and gain deeper insights before anyone else, you have to be there. Don’t miss it! Stay tuned to register, plus find our monthly Small Business Insights, National Consumer Credit Trends reports, the Market Pulse podcast, and more at our Market Pulse hub. 

Source:

Equifax, February 2026 Market Pulse Webinar