Stable mortgage rate environment reshapes how LOs engage with borrowers

Analysts, economists and mortgage professionals are coining this quarter’s activity as one of the most “calm” periods for mortgage rates in recent memory. It follows nearly three years of borrowers being sidelined by higher rates or “stuck” in loans with historically low rates.

BTIG analysts said Wednesday that despite Treasury volatility in April, mortgage rates remained unusually stable this quarter. Rumors are growing that the Federal Reserve will cut rates in July, leading analysts to expect affordable products like adjustable-rate mortgages (ARMs) to make a comeback.

Borrowers seem to be warming up to rates that have limboed between 6% and 7%. Some mortgage professionals point out that rate cut rumblings and the news cycle are prompting borrowers to take a second look at homebuying opportunities.

“That’ll trigger activity just because it’s something tangible,” said Phil Crescenzo Jr., Southeast division vice president for Nation One Mortgage Corp., said about the Fed’s potential rate cut. “It might not even make that much of a difference, but it’s psychological, right? And it’s emotional.”

Crescenzo characterizes the mortgage market as flat. “I would say this year of 2025, we’ve seen very little movement for the first half of the year of any significance. Buyers are fatigued, but the odds are in their favor now.”

Crescenzo also said that some consumers are still wavering and waiting to see a rate with a 5 handle — even if it’s 5.99%.

“Emotions get involved. … It’s a psychological effect that these borrowers are experiencing. But it’s also about how you frame it,” he said. “I have clients that bought three years ago, five years ago, and they might be sitting on, you know, $40,000, $60,000, or $75,000 in that short span of a potential equity gain.

“So I’m also letting them know that the higher interest rates are opening up opportunities, and when the rates drop, even though the home might be more affordable on the payment, sale prices go up based on the demand.”

Reframing borrowers’ expectations

Craig Garcia, president at Miami-based Capital Partners Mortgage Services, called the current market an “opportunistic” one for borrowers, which is changing the way he approaches conversations about the market.

“Buyers can go in and make offers on properties with sellers who are much more willing to negotiate than they’ve been in any number of years,” Garcia said. “And so there’s the idea of getting some money from the seller to use to either permanently or temporarily buy their rate down.

“They can, in some respects, craft the way they want to take the loan. They could negotiate a 2%-off-the-price credit from the seller and use that to get a 2/1 temporary buydown.”

Garcia said that the first few months of 2025 were “steady” with new applications, but April was uneasy due to conflicting news about tariffs.

“We probably dropped about 20%, but since then, we’re back above where we were prior to the tariffs being introduced. So I do think that the market has calmed down,” he said.

Melissa Cohn, regional vice president at William Raveis Mortgage, said that a lull in a vicious rate cycle has led to calmer conversations with clients.

“Buyers and would-be borrowers can take time to figure out which way they want to go without having any pressure on them, and that always makes it an easier, nicer conversation,” she said.

Cohn also said it’s too early to talk to clients about refinances.

“We’re not at a point quite yet where we’re ready to start talking about refinancing, because rates just haven’t declined enough. But with everything that we’re seeing now, it looks like we will be in for more stability and hopefully downside momentum to mortgage rates. And that’s just always a happy conversation.”

Still, Cohn said that she’s instructed buyers to revise their rate expectations to be more realistic.

Reece Cohen, an Atlanta-based branch manager at Atlantic Bay Mortgage Group, said he’s also had to offer reality checks to clients who were “spoiled” by sub-3% mortgage rates.

“If you’re waiting for that rate, you’re not going to get it, and you’re going to lose out on opportunities for home equity,” Cohen said. “Historically, for the last 50 years, the average rate of a 30-year fixed is probably closer to 7.75%. So we are still at a point where rates are below average from a historical standpoint.”

As for managing past clients’ expectations, Cohen said that he reframes the conversation to focus on the borrower’s equity at hand.

“When I talk to clients about giving up that low rate, I also look at the impact of that market. Maybe they bought a house that was $300,000 or $400,000, and that house is now worth $600,000. They’ve gained a ton of equity due to that,” he said.

“So yes, you might be giving up a low rate, but you’re also taking advantage of maybe having more equity in your home to buy that next property that you wouldn’t have.”