While forecasted rate drops have been delayed, one exec believes refis are ready for a future rate decline
Mortgage experts have been forecasting a surge of refinances across the US based on projected interest rate declines – and while economic conditions have put this surge on hold, one executive believes a refi boom is imminent and urges mortgage professionals to be ready.
Michael Brennan (pictured top), president of Nationwide Mortgage Bankers (NMB), stated that many pent-up refinances are awaiting a rate decline. While the Federal Reserve held off on cutting rates this month, it has signaled that rate cuts are possible in the second half of the year.
If rates drop, Brennan believes the refis will quickly follow.
“(Rates have) been holding pretty steady, high sixes to low sevens, and it's still a great rate,” Brennan told Mortgage Professional America. “At a 6% rate, there's potentially 5 to 6 million refi opportunities out there, which is incredible. There are only 2.7 million purchases per year. So there's definitely an opportunity.”
He talks with both those waiting for a refinance and those looking to buy a home to be prepared for potential rate declines.
“It's about being prepared for when the opportunity comes,” Brennan said. “And that's why being with a mortgage professional (is important). We're here for the long term, so we can look at the information, see what you're comfortable with, and have everything ready. We’ll build the file, so once you find that you're ready to make that purchase and make that offer, we're able to jump on it right away.”
Time for a mortgage checkup
However, many customers with an existing mortgage have an interest rate significantly lower than the current rates. That’s why Brennan suggests homeowners sit down with a mortgage professional to get a complete picture of their financial situation and determine if a refinance makes sense.
“My question is, when's the last time you got a mortgage checkup?” Brennan said. “And most people will sit there and say, ‘Well, I'm not sure. What do you mean by a mortgage checkup?’ When's the last time you just sat down and put everything on the table, and said, ‘Hey, this is my mortgage payment. This is what I'm paying in monthly credit cards. This is what I'm paying on my car note. This is what I'm paying on personal loans or a HELOC.’”
Many people only consider the mortgage rate and don’t realize that a refinance with cash out can allow them to pay off high-interest debt and potentially lower their overall monthly payments.
“When's the last time you took a look at it, because there are a lot of misconceptions,” he said. “People only look at the mortgage rates, and they use that as a guide to say, ‘Oh, well, there's nothing I can do. I have a lower rate right now than the rates offered.’”
Not only is there a record amount of home equity in the United States right now, but Brennan notes more than a third of homeowners do not have an existing mortgage on their home.
“Right now, 36% to 37% of homes are free and clear in the United States, which is an incredible number,” he said. “On average, there’s about 48% equity in the average home. Also, consumer debt is at an all-time high. If you look at the average credit card, rates are anywhere from 27% to 30%. The average car note is in the sevens, sometimes in the eights.”
Blended rates are the key
Mortgage brokers have been using the concept of blended rate to help customers understand how high-interest debt is weighing down household budgets. By wiping out that debt with a refinance, even if the mortgage interest rate goes up, the household is in a better financial position.
“People can have a blended rate right now in the sixes and sevens,” Brennan said. “I’m talking about reducing your overall debt.”
He said that some people will push back, not wanting to add more years onto their mortgage. However, Brennan tells them that with their monthly payment savings, they can pay extra on the mortgage principal balance, pay off the loan faster, and still have lower monthly payments than they currently have.
Brennan tells customers that if they plan to be in their house for only another year or two, a refinance might not make sense. But if they’re in their forever home, or at least plan on hanging around for many years, it might be time to refinance. Still, he also coaches consumers on how not to run their consumer debt back up once it’s paid off.
“We can show them different avenues on what they can do to pay down debt,” Brennan said. “What we also want to do is coach and encourage them not to ramp up the debt after they pay it off. That’s where working with financial planners, working as a trusted advisor, to help them with long-term goals.”
His last piece of advice to both homeowners and brokers is to be ready. He encourages people to get with brokers now to plan out what to do when interest rates drop and the refinance wave begins.
Lawrence Yun, Chief Economist at the National Association of Realtors, believes a rate decline could trigger a surge in home demand. Even small changes in mortgage rates impact sales, and a 0.5% drop could significantly boost buyer activity. https://t.co/GY1GUmGZzb
— Mortgage Professional America Magazine (@MPAMagazineUS) June 20, 2025
“So, what I would encourage people to do now is don't wait for rates to go down,” he said. “Get with a mortgage advisor, sit and talk to them now and figure out what I call your strike price. Where do the rates need to be (to refinance)? Why? Because you want to be able to lock quickly. If you remember September of last year, we had a dip in the rates. It lasted a week. That was it.
“Do the work, get with somebody now, get a free consultation. It doesn't cost you anything. The worst thing you're going to get is to get educated on where you need to be, and how you pay down your debt.”
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