Do you have what it takes to scale profitably for the model you are running?

When our first article ran two weeks ago, Freddie Mac had the 30-year fixed rate at 6.66%. As of this writing, rates hover above 7% for the first time this year. The premise of this series, that no strategic plan should rest on rates rescuing the market, has not only held up, but it has emphasized the point further. The arithmetic of what a rate move costs this industry is well documented. The National Association of Home Builders estimates that a single quarter-point movement in the 30-year shifts approximately 1.4M American households across the affordability threshold for a median-priced new home, a home that 88.2 million households, roughly 65% of the country, already cannot afford. On the supply side, research from the Federal Housing Finance Agency (FHFA) finds that for every percentage point by which market rates exceed a homeowner’s existing rate, the probability that the home sells falls by 18.1%; that lock-in effect prevented an estimated 1.72 M transactions between mid-2022 and mid-2024. A 40bps rise, which is what the past two weeks delivered, removes demand and supply simultaneously, and no lender’s strategy can restore either. That is precisely why this week’s questio...