Understanding the Mortgage Market Then and Now: Five Years of Change, Pressure, and Adaptation
Highlights:
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Lenders must prioritize customer retention and lifetime value in the current high-rate environment, as this is a more efficient strategy than focusing solely on new originations.
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Adaptability is critical; success depends on moving beyond past playbooks to embrace data-driven decisioning using current credit and economic insights to accurately assess risk and opportunity.
When Market Pulse, the premier thought leadership platform from Equifax, launched in 2020, the mortgage industry was entering one of the most unexpected growth periods in its history. A global pandemic shut down large parts of the economy, but mortgages surged. Five years later, the story looks quite different. Interest rates are higher, affordability is tighter, and both lenders and borrowers are navigating a more cautious environment.
Looking back at the last five years helps explain how we got here and what we should know as we move forward in 2026 and beyond. It also sheds light on what lenders should focus on in 2026.
Five Years Ago (2020): A Historic Refinance Boom
In 2020, mortgage activity took off at record speed. Interest rates dropped to historic lows, with some 30-year fixed rates dipping near 2.7%, sparking a massive refinancing wave as homeowners rushed to lock in lower monthly payments.
First mortgage originations were projected to close 15% higher than the previous record-setting year of 2003.¹ Mortgage debt increased by roughly $240 billion in just a few months, reflecting how quickly consumers responded to favorable conditions.
At the same time, the industry faced serious uncertainty. Millions of homeowners entered forbearance under the CARES Act, raising concerns about widespread defaults. A major focus of Market Pulse coverage at the time was clarifying that for federally backed loans, missed payments did not need to be repaid as a lump sum — a key detail that helped stabilize both borrowers and lenders.²
Despite the disruption of the pandemic, the mortgage industry proved resilient. Low rates, government protections, and strong consumer demand created a foundation that would shape the next several years.
Two and a Half Years Ago (Mid-2023): Rate Headwinds and Market Reset
By mid-2023, the environment had shifted dramatically. The Federal Reserve raised interest rates at the fastest pace in U.S. history, with the federal funds rate climbing 4.5% in 2022 alone. Mortgage rates followed, putting pressure on affordability and slowing new home purchases.
Market Pulse conversations during this period focused on how rising rates were cooling demand and triggering price corrections in overheated housing markets.³ Homes that once sold in days with multiple bids began sitting on the market longer. Sellers adjusted expectations, and buyers became more selective.
For mortgage lenders, the biggest change was strategic. The refinance boom was over, and origination volume declined. Companies had to pivot toward retention — finding ways to keep existing customers engaged, offer value beyond rates, and compete in a smaller pool of qualified borrowers.
This period served as a reset. The industry moved from rapid growth to careful recalibration.
Today: Stable Debt in a High-Rate World
Today’s mortgage market is steadier but still under pressure. Interest rates remain elevated, and affordability continues to be a concern as consumers juggle higher costs across essentials like food, insurance, and utilities.
Even so, mortgage debt has continued to grow — up 3% year over year — signaling ongoing activity and consumer commitment to homeownership.⁴ Rather than sharp spikes or sudden drops, the market is showing gradual, measured movement.
Borrowers today are more cautious and more informed. They shop rates carefully, think longer about major purchases, and are less likely to refinance unless there is a clear benefit. For lenders, this type of buyer behavior means success depends less on volume and more on precision.
What This Means Now: Actionable Insight for Lenders
Looking across the last five years, one theme stands out: Adaptability matters more than ever. But how?
First, focus on retention and lifetime value. In a high-rate environment, keeping existing customers is often more efficient than chasing new ones. Personalized offers, timely education, and proactive outreach can make a real difference.
Second, lean into data-driven decisioning. Borrower behavior has changed, and past playbooks no longer apply. Using credit and economic insights to understand risk, affordability, and opportunity is critical.
Finally, meet consumers where they are. Today’s borrowers value clarity and trust. Clear communication around options, costs, and long-term impact can help build confidence, even when rates are high.
The mortgage industry has weathered extreme change before. By learning from the past five years, lenders can position themselves to stay resilient in whatever comes next.
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