Dave Lykken explores the boom-bust mortgage cycle

Diego Sanchez: What are your takeaways so far today? What are you thinking?

Dave Lykken: It’s important that we get focused — and everyone needs to focus on data. We get opinions. We hear a lot of things on podcasts. I do a podcast. We all have gotten caught up in rumors, and you think you’ve done your fact checking. And then you find out when you come to an event like this that maybe not so much.

I will be doubling down a lot more on fact checking the content I put on my podcast, because it’s coming down to data.

Next, the conversation moved to a discussion point on mortgage rates. Sanchez mentions that 6% is a “magic mortgage rate,” according to Altos President Mike Simonsen and HousingWire Lead Analyst Logan Mohtashami. Lykken chimes in with his opinion.

Lykken: I think it’s very possible. And then, the question that was posed was, are you ready?

Following that, they discuss the boom-and-bust cycle of the mortgage industry.

Lykken: The boom kills us because we’re too slow to cut back and not fast enough to gear up when the boom happens.

Sanchez: Wouldn’t it be great if we could be less of an accordion?

Lykken: It’d be nice, in a perfect world. But it is what it is. Some of the things that are going on right now — whether you agree with this administration or not — are setting the stage for what could be less of the accordion effect.

I look at the Fed policies that I haven’t always agreed with. And I like, for right now, holding rates as high as they are. I’d like to stimulate the economy to help stimulate housing. I know they have their reasons for that. So a lot more is going to be played out, Diego.

To end the conversation, the pair explore current and upcoming challenges in the 2025 mortgage market.

Lykken: There’s an overall fear or anxiety or concern about what’s going on in D.C. Love him or hate him, this administration is shaking things up. You look at DOGE, and you look at how many people are being laid off, and what does this mean to the services that we’ve become accustomed to?

So there’s optimism that, reasonably, interest rates could come back down, and we cross over that threshold where people will want to start buying. But what are we doing to the stability of our housing finance system? That’s an angst that’s there.