Mortgage lenders are recalibrating ahead of the Federal Reserve’s anticipated monetary easing cycle by rolling out rate promotions, streamlining operations and broadening product menus. They aim to capture demand while navigating affordability and margin pressures.
Executives told HousingWire they’re preparing for renewed borrower activity as rates edge lower — but with caution, given political headwinds, inventory shortages and the risk of refinancing churn.
Chase Home Lending, for instance, rolled out a limited-time purchase rate sale in August and is now offering discounted pricing on rate-and-term and cash-out refinances through Sept. 21. The bank has also introduced a home equity line of credit (HELOC).
“It’s difficult to predict where rates will go exactly as they don’t always move in predictable ways. While we are seeing positive indicators of lowering rates, there is always the possibility for rates to go up again,” said Erik Schmitt, consumer direct executive for Chase Home Lending. “But we’re seeing increased demand from prospective buyers as rates have dipped in recent weeks.”
Schmitt added that Chase will “continue to evaluate products and offerings to see how we can help customers address affordability challenges as well as attain and sustain homeownership.”
Top lender United Wholesale Mortgage (UWM) has chosen to extend its 90 basis-point incentive for rate-and-term refinances until Oct. 1. Originally set to expire on Tuesday, this offer applies to conventional, jumbo and Federal Housing Administration (FHA) rate-and-term refis, as well as those covered by the U.S. Department of Agriculture.
Additionally, it includes FHA Streamline products, along with Interest Rate Reduction Refinance Loans (IRRRLs) and Type 1 cash-out loans available through the U.S. Department of Veterans Affairs (VA).
“We’ve experienced a busy few weeks and this extension is designed to help brokers maintain their competitive edge and continue the momentum we’re feeling in the wholesale channel,” a spokesperson for UWM told HousingWire via email.
More agile approach
Michael Gaines, senior vice president of capital markets at Cardinal Financial, said lenders are adapting by taking a more agile approach.
“At Cardinal Financial, we’ve adapted by emphasizing product diversity and operational efficiency,” Gaines said. “Through our custom-built loan origination system, Octane, we can move quickly, control workflow, and deliver pricing that reflects real-time market conditions. This allows us to serve both purchase and refinance borrowers effectively, even as rates fluctuate.”
Cardinal has leaned into temporary buydowns, second liens and down payment assistance programs. These products “expand affordability without compromising stability,” Gaines said.
“These tools protect volume by keeping borrowers engaged and protect margins by aligning products with real borrower needs,” he added.
Still, a refinancing wave carries risks. One is early payoffs (EPOs), which can create challenges for loan officers, lenders and investors. Gaines said that “strong investor relationships and clear communication are key to navigating it.”
Investors are well aware of the cycle dynamics, but proactive management helps maintain confidence while still serving borrowers who can benefit from refinancing, he added.
‘Certainty and price’
At New York-based Tomo Mortgage, CEO Greg Schwartz said the company has focused on two pillars: “certainty and price.”
The cost gap between competitive lenders and overpriced ones has widened to nearly $300 per month, Schwartz said. Rate sensitivity remains high as 85% of buyers have delayed their search at some point waiting for lower rates, while 75% still view today’s rates as unusually high, according to Tomo’s research.
“If policy signals reinforce a glide path lower, we would expect some of those sidelined buyers to reengage,” Schwartz said. He added that Tomo offers “among the lowest rates and publishes those real rates (not teaser rates) on our site for all to see.”
Closing speed is another differentiator. During the pandemic-era refi boom, many lenders struggled to close on time due to capacity constraints. Schwartz said Tomo has maintained an on-time closing rate of 98%, compared to an industry average of 40%.
Looking ahead, Schwartz estimates rates would need to fall another 1.5 percentage points to return affordability to pre-pandemic levels. Still, he cautioned that politics may weigh on consumer sentiment.
“Although President Trump’s criticism of the Fed and Chair Jerome Powell has drawn significant attention, only a small share of homebuyers (20%) believe the political process will move rates.”
Cotality chief economist Selma Hepp mentioned another challenge to the industry: “The current housing market remains constrained by a lack of inventory in many parts of the country,” she said.
“A modest drop in mortgage rates may not be enough to incentivize sellers to put their homes on the market, meaning any increase in buyer demand could put upward pressure on home prices, offsetting the benefit of a lower rate,” Hepp added.
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