October 2025 Market Pulse: Macroeconomic Trends and Mortgage Industry Shifts

Highlights: 

• The U.S. economy is experiencing rapid changes, including a slowing labor market and declining consumer sentiment, which are influencing business and consumer behavior. Despite this, economic downturn risk remains subdued according to economist forecasts.
• The mortgage industry is seeing increased competition around credit scores, with VantageScore 4.0 offering enhanced predictive power and an expanded consumer base by incorporating non-traditional payment histories and trended data.

The U.S. economy continues to change rapidly. From a slowing labor market to a slumping consumer sentiment, several key factors are shaping how businesses, and consumers, are behaving and planning for the future. 

Understanding what’s happening now can help us prepare for what may come next. Below, we break down the five macroeconomic trends from our October 2025 Market Pulse webinar as well as four key insights around the increasing credit score competition in the mortgage industry and VantageScore. 

Be sure to register for November’s webinar so you have first access to the most up-to-date trends and data. 

Top Five Trends From the Current U.S. Macroeconomic Landscape

1. Downturn Risk Remains Subdued

Economist consensus forecasts do not indicate an economic downturn within the next 12 months, and their predictions are becoming less negative. However, a federal government shutdown will temporarily impact GDP. For each week a shutdown lasts, the economy loses about 0.1% in real GDP growth, which carries the risk of causing consumers and businesses to cut back.

2. Consumer Sentiment Signals Worry

Consumers remain significantly worried about the economy, with sentiment levels near those seen during the 2008 financial crisis. This continued anxiety could suggest potential changes in consumer spending as general consumer reluctance could affect purchasing decisions. 

3. Trade Policy and Pricing Uncertainty

Trade policy and costs have been highly dynamic throughout 2025 and are still changing, creating considerable uncertainty for supply chain and pricing strategies. The price of domestic goods is also affected by these changes, particularly in sectors with a high volume of imports. 

4. Labor Market Momentum is Slowing

The labor market is showing signs of cooling. The hiring rate has slowed, and the quit rate has also decreased to levels typically seen at the start of an economic downturn. 

5. Housing and Mortgage Market Stagnation

Despite recent rate cuts by the Federal Reserve, mortgage interest rates remain elevated. As a result, home sales ground to a halt following the Fed’s rate increases and remain stagnant for 2025, although sentiment is starting to trend up. A significant challenge is the high fallout rate in the mortgage pipeline, with roughly 40-45% of applications for a home purchase mortgage failing.

Five Things To Know About Changes in Credit Score Competition and VantageScore 4.0

The mortgage market has been a hot topic in 2025 especially as industry competition around credit score pricing increases. In September’s webinar, Joel Rickman, GM and SVP of U.S. Mortgage and Verification Services at Equifax, engaged in an insightful discussion with Tony Hutchinson, EVP and Head of Public Affairs at VantageScore, on how the mortgage industry is changing and what you should know about what happens next when it comes to credit scores and VantageScore 4.0. 

1. Enhanced Predictive Power

VantageScore 4.0 is positioned as a significantly more predictive and inclusive credit scoring model compared to classic scores in the marketplace. This enhanced performance helps improve safety and soundness in the financial marketplace, which is a key goal for both primary and secondary markets.

2. Expanding the Scored Consumer Base

VantageScore 4.0 incorporates non-traditional payment histories and utilizing trended data over a 24-month period, moving beyond a single ”point in time” snapshot and allowing more consumers to be scored. By including more of the population, the score provides businesses with a larger universe of people they can confidently provide credit to.

3. Data Elements for a Modern Economy

VantageScore 4.0 incorporates predictive attributes from the robust data sets of the three nationwide credit reporting agencies. Crucially, this includes payment history for non-traditional credit elements such as rental payments, utility payments, and telecommunication payments. This data accurately reflects the current economy and how consumers manage obligations today, offering a valuable pathway for those with limited trade lines, like younger consumers and first-time homebuyers.

4. Driving Adoption Through Transparency and Education

While adopting a new credit score does require a concerted effort from customers, which VantageScore supports through extensive education and transparency. The process involves customers starting early, gaining practical application by testing the score on existing portfolios, and collaborating with the VantageScore team to analyze results. This two-way street approach ensures customers fully understand the model's high performance and how it uses the robust data available from the three nationwide credit reporting agencies to maintain predictive power.

5. The Role of Credit Bureau Data

A fundamental requirement for generating a highly predictive and accurate VantageScore is the robust data provided by credit bureau partners like Equifax. As an algorithm company, VantageScore relies entirely on this comprehensive data set. Without this 'plethora of information' to mine, the score would lack the necessary predictiveness and accuracy. This partnership underscores the score's reliance on a strong data foundation.

Keep Your Business Goals Within Sight

Need your business to run better and more efficiently? Reach out at riskadvisors@equifax.com.  

We hope you will join us for our November 2025 Market Pulse webinar taking place on Thursday, November 13, 2025, where our talented and dynamic panel will discuss their latest insights on overall consumer financial health and navigating uncertainty and consumer shifts as we head into the holiday shopping season. To ask questions in real time and gain deeper insights before anyone else, you must be there. Don’t miss it!

Interested in learning how personalized insights can drive your business forward? Sign up for a complimentary 60-minute Market Pulse Advisory with one of our experts. 

Find our monthly Small Business Insights, National Consumer Credit Trends reports, the Market Pulse podcast, and more at our Market Pulse hub. 

Broaden your perspective with insights that inspire bold innovation, confident adaptation, and decisive leadership through our Trends and Insights resources. 

Finally, connect with us on YouTube and LinkedIn for even deeper insights.

Source: 

1. Equifax, October 2025 Market Pulse Webinar