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Total Expert’s Joe Welu–Retention Is the Key to Winning the 2024 Refi Surge
Joe Welu is founder and CEO of Total Expert, a fintech software leader that launched the first customer experience platform purpose-built for modern financial institutions. Since 2012, Joe has led Total Expert’s vision, culture and growth to more than 300 employees today. The company powers marketing and customer engagement for more than 200+ financial institutions—from leading community banks and credit unions to 15 of the top 25 U.S. banks and lenders.
We knew it was coming—eventually. After 11 rate hikes starting in March 2022, the Fed in December 2023 signaled its intentions to lower rates through 2024. With mortgage rates already dropping, virtually everyone that bought a home in the last 18 months will benefit from a refinancing conversation with their lender.
![](https://newslink.mba.org/wp-content/uploads/2024/01/Joe-Welu.jpg)
But this refi surge will look a lot different than the all-out boom of 2020. Lenders will need to be much more strategic if they want to capture net-new refis—and, more importantly, if they want to avoid potentially enormous early pay-off (EPO) penalties on the huge volume of practically new mortgages likely to refinance.
How Big Will the Refi Surge Be?
After two years of rising rates and rising housing prices, the mortgage industry naturally responded enthusiastically to the Fed’s December announcement. At the time of publication, mortgage rates had already dropped to 6.75% from their high around 8%. While rates likely won’t continue a free-fall, we should see a steady decline in 2024 and 2025.
“We expect that this path for monetary policy should support further declines in mortgage rates, just in time for the spring housing market,” Mike Fratantoni, chief economist at the Mortgage Bankers Association, told Bankrate. The National Association of Realtors predicts home sales will rise by 15% next year, as falling rates bring hesitant buyers off the sidelines.
But an additional opportunity for lenders is the oncoming wave of refinancing. How big is that refi opportunity? Total Expert estimates that if rates drop below 7.25%, lenders will be looking at an estimated $81 billion in refis up for grabs—and that opportunity jumps to $190 billion if rates fall below 6.5%.
This Refi Surge Brings an Underlying Risk
In the heat of the refi tidal wave we experienced in 2020–2021, many lenders had refis pouring through their doors and the only strategy was “try to keep up.” This year, lenders will need to be much more proactive, or see net-new opportunities stolen by more aggressive competition.
Yet lenders must be wary of putting refi acquisition ahead of refi retention, or this big opportunity could quickly flip into a catastrophic risk. That’s because nearly all refis in 2024 will be on mortgages originated in the last two years—with a huge portion of those in the last six to 12 months. Losing these refis won’t just be a hit to long-term revenue, it will also bring a wave of EPO penalties that will quickly overwhelm any hard-earned refi acquisition revenue.
Here’s some quick math: At the industry-average retention rate of around 20%, a mortgage lender that originated 1,400 loans above 6.5% over the last 15–18 months stands to lose more than 1,000 of those refinance opportunities. That adds up to $280 million of lost loan volume (assuming an average loan size of $250k). If 800 of those loans are less than 6 months old, that adds up to $4.8 million in EPO penalties.
What Will Separate the Winners From the Losers of the 2024 Refi Surge?
In 2020, the refi boom was a rising tide lifting all boats. But the 2024 refi surge will create a sharp divide between winners and losers in the mortgage lending industry. The winners will be those that successfully hold onto existing customers’ refis, while the losers will see EPO penalties torpedo revenue and growth from below.
Moreover, the winners will engage existing customers proactively—now, not when rates finally drop—to help them understand how to navigate a falling-rate environment in the coming months. For example, helping customers make the cost-benefit calculation of refinancing at a .1% lower rate versus waiting four, six or eight months for rates to fall further. This is the kind of genuinely useful, educational engagement that will outshine the low-rate competitor offer guaranteed to be arriving in your customer’s inbox every day in 2024.
Build Out Retention Strategies Now—or You’ll Be Playing From Behind
As they say, the best time to build out your refi retention strategy was yesterday. But the second-best time is today.
Refi volume will accelerate quickly as rates start to drop in the coming months. Competitors will be ready to fire off their refi acquisition campaigns, aiming to be the first to entice customers with low rates. Brokers will need to beat them to the punch and start deepening loyalty now with useful, educational guidance to help customers navigate the next round on the rate roller coaster.
(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 your submissions. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)