Stan Middleman on AI, Mortgage Rates, and Why 2026 Could Be a Turning Point
Freedom Mortgage CEO Stan Middleman says 2025 unfolded almost exactly as expected — steady rates, predictable volume, and a “wait-and-see” environment. But heading into 2026, he believes the housing and mortgage industries are on the verge of meaningful change driven by interest rate shifts, rising unemployment, emerging AI impacts, and possible political pivots.
Middleman expects mortgage rates to trend lower next year, largely due to potential job losses tied to artificial intelligence. He points to Amazon’s large-scale layoffs as an early sign that AI-driven displacement may already be underway. If unemployment rises, rates could fall 75 to 100 basis points, and possibly more, helping push mortgage origination volume toward $2.5 trillion or even close to $3 trillion.
However, he warns that affordability likely won’t improve despite falling rates. Lower borrowing costs tend to push home prices up, and with no major increase in housing supply expected, affordability could remain tight — or even worsen. Middleman also sees 2026 as a turning point for technology in mortgage servicing. Faster data access, better customer-facing automation, and improved handling of exceptions will significantly enhance the borrower experience.
Politics may also shape next year’s lending environment. Middleman credits the current administration for deregulation that has helped lenders, but notes that control of Congress will influence whether pro-business or more restrictive policies dominate.
Looking farther ahead, he warns that liquidity risks could emerge for products tied to private-label securitization — such as non-QM loans, second mortgages, and CLOs — in 2027 and 2028. For now, the opportunity lies in preparing early, adapting to technology advancements, and taking advantage of expected volume increases.
Middleman also predicts that large, technologically advanced nonbanks will continue to gain market share as banks remain constrained by regulation. Ultimately, his message to the industry is clear: don’t wait for conditions to improve. With volume expected to rise up to 20% next year, lenders who act now will be best positioned to benefit.
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