Featuring the perspectives of:

Claudia Castano
Mortgage Broker, Miami Lending Advisors

Jeremy Collett
Chief Capital Markets Officer, Rate

What do you expect to happen with interest rates in 2025?

Claudia Castano: At Miami Lending Advisors, we anticipate interest rates will gradually adjust downward and stabilize at a level where people feel more comfortable committing to a mortgage. However, as rates normalize, we’re likely to see an uptick in property prices because more buyers will be ready to make a move. While I don’t expect rates to drop to the historically low levels we saw a few years ago, I believe if we can stabilize around 6%, we’ll see a healthy mix of both purchase and refinance activity. Also, the South Florida market isn’t as sensitive to rate changes because of the large percentage of cash buyers, who may be motivated to leverage their investments as rates decline. Additionally, South Florida has a significant concentration of international buyers, who are less affected by rate adjustments, as their primary goal is asset protection by moving their funds from their home countries to a more stable economy like the U.S.

Jeremy Collett: Markets have been trading decisively risk-on since Trump’s election win, characterized by large rallies in equities and crypto currencies. The inflows to higher returning investments have left the bond market teetering, and as a result, interest rates have moved materially higher. The outlook for future Fed rate cuts has cooled, and our base case suggests we’ll only see 50-75 BPs of cuts next year — so rates should be “lower but slower.” Thirty-year mortgage rates likely remain in the 6s throughout 2025.

What will be the biggest challenges and opportunities for lenders in 2025?

Castano: One of the biggest challenges for lenders in 2025 will likely be maintaining a high level of service, especially if we see a surge in refinancing activity. In markets like South Florida, we also face added obstacles with high insurance premiums and steep homeowners association fees, which are making it harder for buyers to qualify. On the opportunity side, South Florida will continue to be a prime destination for new residents and investors alike. With many new projects coming to market, there will be a growing need for financing. Additionally, given the strong cash market in recent years, there are opportunities for homeowners to cash out on their equity, which could further fuel market activity.

Collett: 2025 looks like it will be more of the same for mortgage originators, with focus remaining on cost control, incorporating tech to chop origination costs and building upon diverse product offerings to deal with the market challenges of sustained elevated interest rates. There is tremendous uncertainty around impacts of tariffs, deportation and GSE (government-sponsored enterprise) reform to also cope with.

What will be the impact of AI on mortgage lending in 2025 and beyond

Collett: In 2025, I believe AI is most likely to impact areas like compliance and underwriting, with its ability to quickly call up massive amounts of guidelines and regulation data and insert them into the origination process. There is certainly room and demand to incorporate AI functionality involving OCR technology, which is currently used in the conforming world, into the NQM market.

Castano: AI is transforming the mortgage industry. At Miami Lending Advisors, we’ve already integrated AI tools to streamline our processes, enhancing both efficiency and communication with our clients and partners. One of my favorite AI tools is the virtual assistant that joins my Zoom meetings, providing comprehensive minutes and actionable insights afterward. AI’s ability to analyze client scenarios, complex deals and lengthy documents is opening up new ways to help borrowers who might not fit the traditional mold. As a mortgage broker managing relationships with over 100 banks and countless mortgage programs, AI will also help us navigate guidelines more efficiently and find the right program for our clients based on their profile and the type of property they are buying. What once took hours of reading guidelines and making phone calls can now be done in a fraction of the time, allowing us to offer almost immediate response turnarounds.

Check out this year’s other predictions below!