Associated Bank Thought Leadership Podcast

WGN: We're on with Kim Adams, residential loan officer at Associated Bank. Kim, welcome back.

Kim Adams: Thanks, Steve.

WGN: The headline of this report is, “Mortgage Demand Drops More Than 10% As Rates Hit the Highest Level Since October.” I understand there's some good and bad in all of that. Talk to us a little first about the bad.

KA: Well, the bad shied some people away; however, you know, not bowing out yet. It's been quite a roller coaster this month, and we're just keeping optimistic that things will calm down or get them accustomed to what we have to work with.

WGN: Kim, the numbers sometimes are different from national to local. Sometimes the scene is different. And what are you seeing locally here in the Chicago area in terms of people buying homes, making these mortgage agreements?

KA: We are still seeing quite a bit of activity. I do think that our area of the Midwest is still short in inventory. A lot of competition out there with purchasing—lots of multiple offers seeing over asking price, and it's, you know, it's a pretty emotional process for buyers still.

WGN: Talk to us a little bit about where mortgage rates are at currently, and if there's any projection about where they might be in three or six or eight months.

KA: Sure. Well, right now we're hovering, you know, the rates that were reflected in the fall of 2025. We were coming off a three and a half year low at the end of February. And at the end of last week, we saw the highest rates since September 2025. But, you know, the last couple of days, the market's been correcting and we hope to just to stay on this trajectory. Forecasters are predicting rates to hover between six and six and six and 3/8 throughout 2026.

WGN: Let's switch to refinance demand. Aside from the folks who are seeking these first-time mortgages, I know a lot of people are sitting on mortgages that they would love to refinance at a lower rate. What's the likelihood of that happening anytime soon?

KA: I don't think it's a reason to bow out. You know, we did have a surge in, throughout February, refinancing. And it's really just hanging in there, seeing where the market's going to take us. It's talking to your lender about what will be your sweet spot for a monthly payment. What kind of savings will add value to your monthly cash flow? It's not a one size-fits-all plan. So, you know, again, I say, hang in there. Let's see what happens.

WGN: Well, maybe you could answer that question. When do we know when it's a good time to refinance? I mean, what if what if rates only move just a quarter or a half a percent or something like that? Is that still worth refinancing?

KA: In most cases, I would say no, because there are costs involved in refinancing in most cases. It's really when you see a significant savings first, when you are able to make up any costs, if any, involved in a refinance. And just, you know, again, what's going to add value every month, We do have to make sure, in order to close a refinance, that there's going to be a benefit to you. We can't just turn people's mortgages over for the benefit of, you know, doing the business. There definitely has to be, you know, a value added to your financing.

WGN: What about the adjustable rate mortgage? Is that an option for people? Is that something that people are going into?

KA: Absolutely. Associated Bank, specifically, we have a very good ARM program. We have some products that can get you into the fives. So to your point, we are seeing some clients refinance on a seven-year, ten-year ARM, just, you know, as a little safe haven until we see some calmness, I guess, in the market. So that's a good plan as well. That's definitely a good option. And what we are seeing some good movement on.

WGN: What should you tread carefully with those, though? What are the pitfalls of an adjusted rate?

KA: The pitfall is what happens after that fixed term. So, there's five-year, seven-year, ten-year ARMs, which that term means that's how long the rate is locked for. So ,after seven years it could adjust. And some features do have the ability to adjust as high as 5% over the start rate, over the lifetime. So, you again, you work with your lender to keep you updated, get market updates to see that it's a good time to either refinance or just stay with the ARM.

WGN: We have had quite a bit of global uncertainty happening over the last couple of months specifically with energy prices going up, gas prices going up. And I saw one analyst say that there might be some secondary, second-round effects, as he called it, to the housing sector. And specifically, I think he was referring to the cost of building new homes. And some of the home builders are lowering their estimates for the latter part of this year because of that. We already have a short supply of homes. Talk to us a little bit about what might be happening here that could make matters worse.

KA: Yeah, we're seeing it mainly in the South. Yeah, I think we're pretty safe here still in the Midwest. It's the cost. It's the rates. It's the oil prices. You know, oil prices are a direct correlation to the cost of transporting goods, manufacturing that leads to inflation. So, all the expenses that a builder incurs in building a home, they have to pass on to the buyers, and they're just getting priced out. And there are, again, especially in the South, consumers whose plans were to build a home, they're putting it aside for now. And it's just out of scope for a lot of people with these costs.

WGN: And then in terms of people who are thinking about buying a home for the first time, I know some people have been saving up for down payments, and they've been planning—that planning should continue, yes? And what should those homeowners or potential homeowners be doing now in terms of getting their credit in order?

KA: It's always, always focus on personal financial well-being. Just make sure that your credit score is in good standing. You can always get a free credit report on FreeCreditReport.com. You want to continue saving for a down payment.

The most important thing is just always figuring out your budget. What do you want your monthly payment to be? What is comfortable for you? What will not cause a financial hardship?

In addition to that, you also want to make sure that you do have some reserve after your purchase, whether you build or buy. There's always going to be an expense, even with a new home, that comes with home ownership. So you want to make sure you have some sort of safety net in addition to your down payment. I always say, minimally six months of your mortgage payment has on the side.

WGN: One of the reports I saw said that in February, roughly one in seven homes, or about 13% of homes, that went under contract to go on sale or to be purchased were canceled. And that was about 13% higher than last year. Why are people canceling contracts to buy new homes?

KA: For new construction homes, it's the fear of the cost. During the build, the cost can go up and it might get passed on to the buyers, and they just realize that they're going over their head and their budget. And it wouldn't be financially, you know, it would cause financial hardship for them to continue with the build. 

WGN: If you're sitting in a home that you think you might want to sell soon, what is the decision-making that should go into that as we're in this time of turmoil?

KA: Yes, where are we going to go next? I think prices in our area are still very good. You can sell high, but you will most likely buy high. So, I guess, plan first on where you where you will be going, especially if you're purchasing, because if your buyer's going to buy your home at a premium, you'll be buying a home at a premium as well. So does that make sense? What are the reasons for moving, is the first item that you want to address and then see how that move is going to benefit you? If it's a financial decision.

WGN: Yeah, I've seen a lot of reports about people who are selling their homes and going back to renting. Is that a trend that's happening?

KA: It is a trend. It's also, you know, rents are still increasing. We are still seeing a surge in monthly rental costs. So when they go from homeownership to renting, it can lead to a challenge in saving for the next down payment as well. It’s always a good option. If you want to rely if you have the equity in your home, and you want to sell and have that equity and the cash profits, just make sure that you know if you think that you're getting into homeownership again, that you have your plan set.

WGN: Good, good, good advice. There's another story I want to get your opinion on while we have you. And that's, for the first time, Fannie Mae is going to accept crypto-backed mortgage security here. So are they going to accept Bitcoin as a down payment?

KA: It's going to be a secure-type asset. There is digital lending outlets. They are now willing to securitize crypto assets as collateral, and they'll couple it with a quote unquote regular mortgage. So really, you're going to have two loans: you're going to have a first mortgage, and you're going to have a second mortgage. One’s going to be securitized by your assets. You'll be paying interest on both loans, and they are pledged and you cannot trade that asset. This might open to, you know, for us in the conventional world, to see something new. This might lead to allowing securitizing publicly traded mutual funds as down payments, if you pledge them. And that'll help people who are trying to get into the homeowners market if they do have an asset portfolio that they don't want to liquidate for a purchase. Pretty cool. It's pretty cool. We'll see what that opens our world up to.

WGN: Yeah. And I bet, you know, the next question I'm going to ask is, and that's with, you know, these crypto currencies we saw like for Bitcoin, for example, we saw one month at $100,000 and now it's at $66,000. What happens when the Bitcoin loses its value?

KA: It stays in the securities. It stays as a pledged asset. So, I do believe that they can hold the value. Even if the value of the crypto falls, nothing changes on the loan. You’ve got to keep making the monthly payments.

WGN: But what if you have a backed loan of $100,000 in crypto and all of a sudden the crypto is only worth $66,000? There's a $40,000 difference there. Where does that difference get made up at?

KA: It might at the end get repaid. I think it could stay as a lien until it gets repaid. There is not a lot of information on this yet that I have seen, because, again, these are digital lending outlets, but it could be something pretty cool.

WGN: So you're saying it could come out of your equity when you try to sell the home in the future.

KA: Yeah. Correct. Interesting. Correct.

WGN: Is this a done deal or is it just something that's being tried?

KA: Well, I believe it's a done deal. I believe that Fannie Mae is now purchasing these loans just like any other conforming mortgage. So, you know, if this leads to something good, again, it could help. It could help with the, you know, the general public who don't have the crypto assets. But if they do have some investments that they're willing to pledge, it might be, you know, a nice way to help get into a home.

WGN: Kim, great conversation, as always. How can people get a hold of you and have a one-on-one if they want?

KA: You can email me at Kimberly.Adams@AssociatedBank.com or call me directly at 224-522-0515.