Seven Things You Can Do Now to Be Ready for the Refinance Cycle
Brent Potter is executive vice president and chief operating officer of LoanCare, Virginia Beach, Va.
After several years of stubbornly high interest rates, the Federal Reserve has loosened its grip on rates, approving another quarter point cut in October. The anticipation of rate cuts prompted a mini surge in refinances at the end of the summer, and some observers are predicting something that the industry hasn’t seen in two or three years: a sustained refinance cycle.
Historically, when rates begin to fall, homeowners move quickly to take advantage, and MSR owners who aren’t prepared often find themselves struggling to retain assets. Those who fare better plan ahead—building strategies, capacity and technology with their servicing partners well before the first wave of applications arrive.
Here are seven areas to focus on today to ensure you’re ready.
1. Refresh Your Borrower Retention Playbook
A refinance cycle is, at its core, a battle for relationships. Your customers have more choices than ever, and if you’re not reaching out to them with timely, relevant offers, someone else will. This is the time to revisit your retention strategy with your servicing teams and partners. Which homeowners in your portfolio will be in the money with each rate drop? Homeowners with very low first mortgage rates—say 2% or 3%—will benefit less from a refi than those at 6% or 7%, but they may be looking to purchase a new home or consolidate debt by tapping equity.
Once you’ve focused in on which homeowners to solicit for each product, how will you stay in front of them? Which channels—email, web, mobile app, direct mail, or call campaigns—will perform most effectively? By developing a proactive, comprehensive game plan now, you will be ready to identify and connect with customers that have the highest propensity to take action on lower rates. Reach out to customers now before they explore options elsewhere or lean on the expertise of a subservicer that has perfected the process and can expand customer reach with strategically positioned touchpoints and multi-channel communication across the life of loan.
2. Use Analytics to Spot Refinance Intent Early
Leading subservicers today have the power to identify refinance intent. Some tools, such as those offered through LoanCare Analytics™, track customers’ digital interactions, which then alert lenders on customers that may be in the market for a refinance. Having this insight allows you to reach out with personalized offers before they’ve even begun to shop around, dramatically increasing your chances of keeping your customer and cashflow intact. LoanCare Analytics also provides Paid-in-Full Monitoring, which monitors loan-level payoff activity and monthly trends so, lenders can see exactly which loans were retained as well as runoff details like the new lender, loan amount and interest rate. This level of insight is an extremely efficient way to gain retention intelligence.
3. Streamline and Digitize the Borrower Experience
When borrowers are ready to refinance, purchase or tap into their home equity, speed and simplicity are everything. When the experience isn’t seamless, even the smallest roadblock can cause a customer to fall out of your pipeline. That’s why now is the time to audit your online customer experiences, evaluate lead routing protocols, and stress test technology integrations between origination and servicing platforms. Are documents easy to upload? Is eSign available? Can data flow seamlessly without manual re-entry? A digital-first process not only delivers a better customer experience, it also helps you scale efficiently when activity spikes. Subservicers are built to scale effectively—the best ones do it with fully private labeled options and a suite of communication tools that meet the customer where they are.
4. Enhance Self-Service Options and Call Routing
When rates drop, consumer interest spikes. Increasingly, homeowners expect to get quick answers to their questions through self-service tools. Your subservicer should be equipped with modern digital communication channels—secure portals and mobile apps that can handle high volumes of borrower engagement and turn refinance signals into lead generation engines.
Equally important is “speed to opportunity,” meaning how quickly lead data flows back to you. If call centers are fielding frequent requests for payoff quotes, you need to know right away so you can take proactive steps. A strong self-service infrastructure, paired with timely communication, and the option to talk to a trained professional for help ensures you’re not just supporting a delightful customer experience, you’re also gaining trigger-based intelligence that will help you retain your asset.
5. Stay Ahead on Compliance and Investor Readiness
Regulatory changes happen nearly every day, and regulators and investors will continue to expect you to meet every standard even when processing high volumes of loans resulting from a refinance surge. One recent example is the recently passed Homebuyers Privacy Protection Act, aka the “Trigger Leads” bill, which aims to curb the practice of selling borrowers’ data to competing lenders once a credit inquiry is made. While the bill is designed to protect consumer privacy, it also underscores the importance of transparency, data governance and borrower trust throughout the mortgage process.
Now is the time for lenders to work closely with their subservicers to review governance standards, compliance checklists, documentation workflows and investor requirements. Establishing safeguards now can help reduce the risk of delays, repurchase demands or reputational damage when volume is at its peak.
6. Open the Home Equity Conversation
It’s important to remember that not every borrower will pursue a traditional refinance. Many will instead look to access equity through HELOCs or home equity loans. By anticipating these conversations now, you can ensure you’re not leaving business on the table. Subservicers can play a critical role in identifying which customers are strong candidates for cross-selling products. A borrower-centric approach that includes both first lien and second lien solutions ensure you’re meeting a broad range of financial needs.
7. Strengthen the Subservicer-Lender Partnership
Finally, none of these strategies work in isolation. Success during a rate-cut cycle depends on strong, consistent collaboration between lenders and a true subservicing partner—one that will never compete for your customer. Establishing regular check-ins and gaining access to on-demand, transparent reporting can make the difference between lost or retained cash flow. That alignment is critical when borrower activity volumes rise.
The Bottom Line
Lower rates will present a window of opportunity. Lenders who wait until the first surge of applications to prepare will already be behind. By working now with your subservicer to refine retention strategies, strengthen technology and build capacity, you can position your organization to capitalize on opportunities to keep your customers yours.
(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)
