The 2026 home lending landscape

As 2026 progresses, the housing market looks different than it did just a few years ago—and so do the decisions buyers and homeowners are being asked to make. The extremes of the pandemic-era market have faded, replaced by a more complex environment that has been shaped by a resilient labor market, cautious investors, gradually improving inventory, and an evolving lending landscape.

In this environment, progress in 2026 will be defined by balance rather than breakthroughs. Borrowing costs are normalizing instead of falling sharply; inventory is improving without fully resetting affordability, and lending standards remain disciplined even as processes become more efficient. Buyers and homeowners who are most successful this year will be those who plan for incremental change, understand where flexibility exists, and align their expectations with a market that is easing forward.

A more familiar interest rate backdrop

Following recent rate cuts, borrowing costs remain elevated compared to what many people grew accustomed to during the pandemic. Still, today’s mortgage rates are not historically unusual. In the decade leading up to 2020, rates spent a long stretch just under 5%, and that period offers a useful reference point for where the market may ultimately settle.

Recent Federal Reserve action has focused on supporting the labor market rather than stimulating housing demand. Inflation pressures, uncertainty around trade policy and jobs data, and questions about balance sheet management have kept long-term investors cautious. That caution has shown in benchmarks like the 10-year Treasury, which has remained stubbornly high even as short-term rates have eased.

For borrowers, this means that change is likely to be gradual. Meaningful declines in long-term rates may take time, but opportunities will emerge along the way—particularly for those prepared to act when conditions align.

Inventory, negotiation, and the pace of the market

One of the most notable shifts in 2026 is the pace of the housing market itself. Inventory is slowly building across the Greater Philadelphia and Delaware markets, where listings have increased modestly compared to a year ago. Nationally, the median U.S. home price was up about 0.4% year-over-year in late 2025, and inventory of homes for sale rose approximately 5% — signs of a more balanced market emerging. Price growth has cooled from its peak, and bidding wars have become less common. While affordability remains a challenge, buyers are beginning to see more room for negotiation and fewer rushed decisions. This could be as extreme as seller concessions or simple as the time to make a thoughtful offer as a buyer.

These changes are not uniform across the country. While more mature markets along the East Coast have seen relatively stronger pricing and demand, many younger, high-growth markets in the West and parts of Florida have experienced price declines or markedly slower growth. Understanding where a local market sits on this spectrum is becoming increasingly important when setting expectations.

Sellers, meanwhile, are operating in a market that rewards realistic pricing and preparation. Homes that are priced well and recently renovated continue to attract interest, but buyers are more discerning and less willing to stretch beyond their comfort zone. One clear sign of this shifting pace is in how long homes are taking to sell: the national median days on market increased from an average of 56 days in 2024 to about 61 in 2025, reflecting a slower, more measured transaction pace and increased leverage for buyers.

For those entering the market this year, these dynamics may matter just as much as borrowing costs when determining what’s possible.

Lending standards and a more efficient process

Credit quality remains a priority across the industry, and underwriting standards have held firm. Lenders are paying close attention to household balance sheets, particularly as early signs of consumer stress appear in areas like revolving debt.

At the same time, the mortgage process itself continues to improve. Advances in automation and artificial intelligence are helping reduce origination and valuation costs, shorten timelines, and improve consistency. For borrowers, that means a smoother experience—but still one that rewards preparation, documentation, and financial discipline.

Flexibility is gaining ground

As the market adjusts, flexible loan structures are becoming a more important part of how borrowers manage affordability and long-term planning. Adjustable-rate mortgages—particularly five- and seven-year options—are gaining traction among buyers who anticipate moving or refinancing within a defined time frame and are comfortable trading some rate certainty today for lower initial payments.

Home equity is also becoming an increasingly important part of the planning conversation for many homeowners. With home values still elevated, borrowers who built meaningful equity over the past several years may have options to access it without refinancing an existing first mortgage. Home equity loans can offer fixed rates and predictable monthly payments that work well for larger or longer-term expenses, while home equity lines of credit (HELOCs) provide flexibility to borrow as needed, with variable rates tied to the prime rate. Particularly for homeowners who may have secured historically low mortgage rates, these products can help meet new financial needs—such as home improvements or debt consolidation—while preserving their existing mortgage structure.

As short-term rates ease, these tools can play a practical role in helping borrowers manage changing financial needs—whether that’s smoothing cash flow, addressing higher-interest debt, or funding planned projects. As with any borrowing decision, success comes down to alignment: understanding how the product works, having a clear repayment strategy, and ensuring it fits within long-term housing and financial goals.

What still holds true

Despite shifting conditions, the fundamentals of successful homeownership remain consistent. Buyers benefit from understanding their long-term plans, not just their maximum purchasing power. Sellers continue to see the strongest outcomes when expectations align with current market realities. And trying to perfectly time the market remains difficult, even in calmer conditions.

Housing decisions are rarely about a single factor. They reflect employment stability, lifestyle needs, financial flexibility, and confidence in one’s plan.

Looking ahead

We expect continued growth in mortgage activity as 2026 unfolds, building on momentum that improved over the past year. The pipeline entering this year is stronger than it was a year ago, and while challenges remain, the market feels more balanced and more predictable than it has in some time.

If you’re considering buying, selling, refinancing, or exploring home equity options in the year ahead, having a clear strategy matters more than ever. Connect with a trusted WSFS lender to help you evaluate your options, stress-test your assumptions, and build a plan that aligns with both today’s market and your long-term goals.

About Jeffrey M. Ruben

Jeffrey M. Ruben is the President of WSFS Home Lending. Jeff joined WSFS through its acquisition of Array Financial, a full service mortgage banking organization, and Arrow Land Transfer in August 2013. Jeff formed Array and Arrow in 2005, having previously held senior executive roles at financial and legal institutions. Jeff is also a licensed real estate attorney.

Through Jeff’s leadership, WSFS Mortgage has achieved year-over-year growth serving a wide range of clientele, from first time homebuyers to self-employed individuals to high net worth clients. Prior to forming Array and Arrow, Jeff served as Executive Vice President of American Business Financial Services, a publicly traded national mortgage lender.

Jeff received his Bachelor of Science from The Pennsylvania State University, Schreyer Honors College and his Juris Doctorate from Temple University School of Law. Jeff is a member of the Pennsylvania and New Jersey Bar and currently serves as a member for the Citizens Audit Review & Financial Advisory Committee of Radnor Township, Pennsylvania. Jeff lives in Bryn Mawr, PA with his wife and two children.