Thuan Nguyen says preparation, not rate timing, will decide who wins when mortgage refinancing picks back up
We are closing in on the end of 2026, and mortgage rates remain near their highest levels in seventeen years. Even at Loan Factory, a company historically known for its refinance volume, less than 30 percent of our business is refinance right now. The rest is purchase. Most existing borrowers are still sitting on rates better than what is available in today's market, so there is little incentive to move. But that will not last forever, and the loan officers who prepare now are going to be the ones who capture the wave when it finally breaks.
The opportunity most loan officers are ignoring
I would estimate more than 95 percent of loan officers are not ready for the next refinance wave, and most are not even taking the first steps to get ready. That is the missed opportunity. When rates drop meaningfully, millions of borrowers will want to refinance, and their only real question will be how to get a lower rate without paying closing costs out of pocket.
Preparing for that moment cannot happen overnight. It takes a team in place, the right systems to process a high volume of applications without bottlenecking, and a base of borrowers who already understand what to expect. Loan officers need to plant that seed with clients today. Educate them now that rates could drop at any time, and that the window to lock in a lower rate might be short. We could see rates dip to somewhere around 5 to 6 percent, hold there for a matter of days, and then climb back up, a pattern close to Barry Habib's prediction that mortgage rates could drop to 5.5 percent in 2026. Borrowers who are not ready to move quickly will miss it entirely.
"More than 95 percent of loan officers are not ready for the next refinance wave, and most are not even taking the first steps to get ready."
Prepare before the rates move, not after
What I tell loan officers is simple: get your clients to apply now and submit their documents today, so that the moment rates drop, you can lock immediately instead of scrambling to gather information. Think of it the way you would think about investing. You open the account and fund it before the opportunity arrives, not after. Waiting until rates move to start preparing means you are already behind.
This also means loan officers need to be visible now, marketing themselves and letting their client base know they are ready to move fast when conditions shift. The originators who stay quiet during a slow market are the ones who get buried when volume returns. We have already seen how quickly windows can open and close: earlier this year, a modest rate dip revived refinancing activity across the country almost overnight, and originators who were not ready lost that volume to competitors who were.
The biggest mistake I saw the last time rates dropped quickly was originators treating the slow market as a signal to coast. Production slows, and too many loan officers respond by working less instead of working harder. That is backwards. A slow market takes more effort, not less, because you are the one building the systems, training the staff, and running the marketing that will let you scale the moment the wave arrives.
Too many originators simply blame market conditions and stop trying. Then when rates move, they are caught flat-footed while more prepared competitors capture the volume. That risk lines up with MBA's own outlook on refinance volume staying below historic levels absent a sustained rate drop, which makes every point of share even more valuable to originators who are ready to compete for it.
Technology, data and the shape of the next wave
Technology has become central to identifying refinance-ready clients before your competitors do. I maintain a database of our clients that tracks credit scores, current interest rates, and loan terms. We have built rate alerts tied to each client's profile, so the moment rates fall to a point where refinancing makes financial sense, that client is notified automatically and invited to apply.
Technology is also what allows a business to scale once that volume hits. During the pandemic, I was personally closing an average of 500 loans a month. That kind of volume is simply not possible without automation handling the bulk of the process. Without the right systems, closing even five loans a month consistently would be difficult.
If rates drop meaningfully, we will see a real refinance wave, but it will not resemble 2020 and 2021. During the pandemic, rates fell below 3 percent. What is more realistic next time is rates settling closer to 5.5 or 6 percent. Even so, the volume will not be small. Millions of borrowers have been locked into higher rates for the past five years, and many of them want out the moment it makes financial sense.
The loan officers who prepared their systems, their staff, and their client base ahead of time are going to benefit far more than those who wait for the wave to arrive before getting ready.
