As mortgage rates continue their slide, now may be time to reach out to hesitant customers
Talk to someone holding on to a mortgage closed in the aftermath of the COVID-19 pandemic, and maybe the recent rate decline might not sound as impressive.
Nevertheless, rates have fallen to their lowest point in 2025, as markets seem to be pricing in at least a 25-basis-point rate cut by the Federal Reserve next week. And while the recent rate slide might not be enough to cause someone with a 2.5% rate to make a move, perceptions are slowly changing, according to one mortgage veteran.
Kirk Todd (pictured top), branch manager and senior loan originator at Choice Mortgage Group, said that as we move farther away from the low-rate environment, homebuyers are starting to realize that the current rates are actually closer to normal than the 2% rates from a few years ago.
“I think it's as we get further than three to four years from the pandemic and those low rates, we're starting to see a psychological adjustment,” Todd told Mortgage Professional America. “This all started in 2022, and we went from rates in the threes and fours, which were abnormal. I've been doing this long enough to know that 5%, 6%, and 7% are normal interest rates long term.”
Affordability challenges
Where Todd is located in Portsmouth, New Hampshire, he has seen affordability issues firsthand. He has witnessed many people unable to afford to live in the areas where they grew up.
“Unfortunately, it's just not affordable for some people to live on the Seacoast where they grew up,” he said. “That's tragic. And it's a lot of cases. I grew up in York, Maine, which is 10 to 15 minutes from Portsmouth. A lot of people who I grew up with can't afford to live here any longer.”
While the current rates might make selling that low-rate mortgage unappealing, one thing Todd tells those customers is that they are likely sitting on a lot of built-in equity in their current property. This can allow them to put a sizeable down payment on a new home, which can ease the pain of giving up that low-rate mortgage.
“People who want to be here are starting to adjust to it,” Todd said. “They have to remember they have a lot of equity in their existing house. The challenge is for first-time buyers to get in, but if you've owned a house, you've got a lot of equity that you never had before. If you're ready to make the move, you're going to get a slightly higher interest rate, but you’ve got a lot of down payment that you didn't have before.”
The recent rate decline has finally pushed some sellers off the sidelines and into the market. Todd points out that life events have them in need of a move, and with rates closer to 6% than 7% right now, they cannot wait any longer.
“Even with just a little bit of a decline, I think a lot of people have just said, ‘Okay, we've been waiting around, and we can't wait any longer,’” he said. “‘We need a bigger house, or we need to downsize.’ We have a client right now that's trading in a 2.75% mortgage because they want to add on to their house. Hopefully, we'll see some rate declines in 2026 so we can refinance a 6.75% loan into a 5.5% loan.”
Low rates mean high competition
One piece of advice Todd has been telling his clients is that if they want to make a move on a home, now is the time. He said if rates continue to fall, or if home prices decline in some areas, competition for homes on the market will increase again. Once that happens, home prices will rise again.
“I've been encouraging clients that if you can afford a house today at these interest rates, now's the time to act on it,” he said. “In most markets, when you start to see rate declines, you're going to see more competition in the market. You're going to see more buyers because it's just going to let more buyers in.”
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— Mortgage Professional America Magazine (@MPAMagazineUS) September 5, 2025
Todd said that, between the equity they currently have and the equity they would gain in their future home by making the move now, the investment will be well worth it for his customers.
“Theoretically, property values will continue to go up,” Todd said. “If you can get in now and afford it now, then you're set up for refinance to a lower rate. Hopefully, in that period of time, it will have built up a bunch of equity. Even if appreciation goes back to 2.5% to 3.5%, which is a normal market, that's a lot of money when you compound it.”
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