Huge equity and revolving debt should allow brokers to encourage refis even in current high-rate market
A high-interest-rate environment following one of the lowest-rate periods in history usually doesn’t make for a great time for mortgage refinances. However, two brokers caution that loan officers shouldn’t assume customers don’t want to refinance their mortgage.
Elevated interest rates have generally slowed down the rate of mortgage refinances. But new data from this week’s Mortgage Bankers Association (MBA) weekly survey shows a 16% increase in the refinance index over the previous week.
Mike Alberico (pictured top left) and Alec Conrad (pictured top right), loan officers with Carolina Mortgage Advisors, are likely not surprised by that news. Alberico said those tied to a low interest rate are starting to consider re-entering the mortgage market, either with a purchase or refinance.
“There are opportunities out there, especially from the buy side,” Alberico told Mortgage Professional America. “Some people still think the golden handcuffs of their 2% or 3% interest rate mean they can't move. But we're starting to see those dominoes start to fall. A good friend of ours is like, ‘I’ve got to get out of my house. We don't like it here. We don't like the neighborhood.’ He was on a 2.25%, 15-year rate that I gave him.
“I told him it was going to be like 6.6%, and he said, ‘I don’t care. This is for my family. We found the house that we love, and we want to move.’ We said, alright, let's do it.”
The other factor starting to drive the refinance market is the amount of consumer debt and home equity customers have accumulated.
“Unfortunately, we know Americans are in debt up to their eyeballs right now,” Alberico said. “I’ve probably done six cash-out refis, and have taken people off those 2% and 3% rates and sometimes put them on a 7% or 7.125% rate, but the overall monthly payment goes down by like $900 even if their mortgage goes up.”
It’s about aggregating debt
Many homeowners see the elevated rates in the current market, compare them to their current mortgage rate, and become discouraged from refinancing. Alberico said it’s important to consider the borrower’s complete financial picture.
“The professionals know, but from a public-facing standpoint what people don’t know is that debt is debt, and you’ve got to aggregate it,” he said. “Your house is your largest asset, and you have the lowest interest rate on there, but you’ve got $25,000 in credit cards at 26% interest or more. That’s where we’re seeing opportunities.
“We always have to be purchase-focused, but there are some refi opportunities out there.”
Conrad said he understands first-hand why some brokers might be hesitant to call the past client who is sitting on a low-rate mortgage.
“You can’t just assume that your clients don’t want the refinance,” Conrad told Mortgage Professional America. “They don’t want the cash out and they don’t want the HELOC. Because I’m the first person saying, ‘I did their loan at 3.25%. I’m not going to call them. I don’t want to take that away from them.’
“Then you take a look at them, and they’ve got a second mortgage that’s maxed out. They’ve got $35,000 in credit cards, and they might have 14% on an auto loan.”
Stacey Melton of Reasy Financial is helping clients rethink low-rate mortgages by highlighting their blended debt rate. By tapping into home equity, she guides borrowers to eliminate high-interest credit card debt and regain control.https://t.co/6xJPLtDmQx
— Mortgage Professional America Magazine (@MPAMagazineUS) May 19, 2025
While ideally, they wouldn’t want to take a short-term car loan and put it on a 30-year mortgage, the combination of higher interest rate debt still puts the customer ahead.
“It helps them from a monthly cash flow standpoint, and it gets them into a happy, better, more affordable place, it’s actually a really good deal for them,” Conrad said.
Turning into a buyer’s market
With the surge in home inventory on the market, Alberico said homebuyers are starting to find themselves in a stronger position than they were just a couple of years ago.
“Alec and I were talking about the other day,” Alberico said. “I even heard him say to one of his clients, if you ignore rate, which nobody likes to ignore rate, but focus on cash to close and payment. Now's an ideal time, like right now. I got one with $8,500 in seller concessions, they’re negotiating more, and they got $5,000 knocked off the sales price.
“Two or three years ago, that would be unheard of. It would have been highest and best offer.”
Conrad has also seen seller concessions, as well as temporary rate buydowns, to entice buyers into the market.
“A very high percentage of our purchase contracts have seller concessions on them, and sizable seller concessions,” Conrad said. “I'm not talking about $1,000. I’m talking $10,000 or more. We just had a lady relocate from Ohio to Clover, South Carolina. She's stretching her budget because she didn't sell her house before buying the new one.
“She negotiated a 2-1 buydown. We don't see that very often. But she did, and that took her from ‘There's no way she can afford it’ to ‘Okay, she can breathe’ the first two years of this mortgage payment.”
The Raleigh and Charlotte, North Carolina markets, where Alberico and Conrad reside, are still hot. And while there are deals to be had, both have run into some sellers and agents thinking the market is hotter than it is.
“Carolina is a hot market,” Alberico said. “Just there's so many people relocating there. The whole triangle area, which is Raleigh, Durham, and Chapel Hill, added 89 people a day in 2024. We're still at inventory issues, but a lot of people don't rely on the right professionals to get their info from.
“Because there are still agents and homeowners out there that thinks it's 2021. They can just put a sign in the yard. It doesn't matter what condition the property's in, it's going to sell and we’re not going to have any negotiations. But that the furthest from the reality.”
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