This article originally appeared in the March 2025 edition of MortgagePoint magazine, online now.
Stanley C. Middleman serves as the President and CEO of Freedom Mortgage, one of the largest and fastest-growing, independent mortgage companies in the country. He is a nationally recognized business strategist, investor, and philanthropist with over 30 years of experience in the mortgage banking industry.
Since founding Freedom Mortgage in 1990, Middleman has grown it into one of the nation’s largest nonbank mortgage lenders and servicers and a top VA and FHA lender. Middleman is an active member of the MBA, where he serves on the Board of Directors and previously on the Residential Board of Governors. He has also served on numerous advisory boards within the mortgage industry, including the boards of Freddie Mac, Fannie Mae, and Ellie Mae. He is currently a member of the Housing Policy Executive Council.
This quarter, we’re asking Mr. Middleman questions about how U.S. economy trends will impact the mortgage sector in the weeks ahead.
Q: What effects will President Trump’s tariff initiatives have on the housing and mortgage markets?
Well, I think it’s too soon to tell, because we don’t even know what those initiatives are going to be yet. From what I’ve seen, if some of the things proposed were to take place, there would be fundamentally no change. The base case is, if you had tariffs and some of these other things, it would only have a nominal change in inflation, and it wouldn’t have a monstrous change in GDP. I think other things that may happen will potentially be more important. I think the wild card is how many people get laid off in government, since government has become such a large sector, and if unemployment were to rise as a result of layoffs in government, combined with other GDP-slowing initiatives, that could potentially result in lower interest rates. I’m not anticipating much change in 2025. I think that there’ll be a lot of noise, but not a lot of substantial outcome variance. I think the impact in ‘26 could be a little bit greater, but I’m not anticipating big changes resulting from those activities. Certainly not this year, and not in the first half of next year.
Q: What is the Fed policy leaning toward in terms of interest rates, and where do you anticipate mortgage rates heading in the coming months?
I think the Fed has indicated that they’re in no rush to do anything, so I don’t see any interest rate changes in the next quarter, and probably not in the next six months. Anything else that happens is going to take some time to have an impact. There’s going to be some volatility, but if we see changes in unemployment, that could lead to lower interest rates. I don’t think we’re going to see enough change in inflation to drive interest rates much higher. It could happen, but I just don’t anticipate that being the case.
Q: Do you see a corollary between the imbalance of housing supply (weak demand) and the economy?
I think the connection really is interest rates, housing supply, and housing demand. We have seen some more housing come online this year, but we haven’t seen the demand drive up prices the way we had been in recent years. I don’t anticipate that we’re going to see interest rates change enough to drive that demand up. We could be a little bit surprised. I believe there is potential for some bigger changes in 2026, depending on how things go.
As we move into the second quarter, third quarter, fourth quarter of 2026, we could see some pretty significant changes in lower interest rates, higher unemployment, increased demand, and some increased activities.
Q: How are ongoing inflation and the Federal Reserve’s interest rate policy influencing mortgage demand, and what strategies should lenders implement to stay resilient in this environment?
We’re in a meandering type of environment, so lenders should expect more of the same, rather than any major changes.
Q: Do you see any risks of a recession or significant economic downturn in the next year, and, if so, what factors would drive this?
Again, we’ll see more of the same. We could potentially see some changes that would stimulate the economy, as there is a potential movement toward a slowdown.
Based on my research, it’s unlikely we’re going to hit an economic wall like a recession. We haven’t seen a negative GDP for back-to-back quarters, and certainly not in the next year, and maybe not for the next two. We could possibly see a deterioration in GDP that may lead to some loosening which would stimulate the economy as we move into and through 2026. That could be interesting, but I don’t see a recession on the horizon.
This quarter is a wait-and-see kind of quarter, so I don’t think we’re going to see anything really going on as much as we’re going to see trends leading us in toward something that could go on later.
We have a good seat for the show, and we have to let things unfold a little bit before we try and solve the mystery.
