Is anyone actually refinancing in this environment? It’s one of the most common questions homeowners are asking right now, and the answer is more nuanced than most published commentary gives credit for.
A survey conducted by Mortgage Research Center, LLC (Refi.com is a brand of Mortgage Research Center, LLC) collected responses from over 1,000 refinance prospects nationwide, painting a detailed picture of who today’s prospective refinancer actually is, what’s driving them, and what’s keeping them from acting. Kyle Bass, Production Business Manager at Refi.com, has been closely watching these trends.
“The popular narrative around refinancing has centered almost entirely on borrowers who locked in sub-3% rates during 2020 and 2021 and have no incentive to move,” Bass says. “Those borrowers are real, but they are not the whole market. A significant share of today’s prospective refinancers bought or refinanced at 5.5% to 7%+ and are actively evaluating their options.”
Who Today’s Prospective Refinancer Actually Is
The addressable market is bigger than most people assume. According to MRC (Mortgage Research Center, LLC), about one-third of homeowners surveyed qualified as either currently refinancing or at least somewhat likely to refinance within the next two years, which is a meaningful pool of people even in a rate environment that has suppressed traditional refinance activity.
The demographic breakdown is worth paying attention to. More than half of the homeowners showing interest in refinancing are Gen Z or Millennials, not the Baby Boomer or Gen X cohort that dominated prior refinance waves. These are younger borrowers who bought in recent years, often at higher rates, and who are actively watching the market for the right moment to act.
A few other things stand out about this group:
- The majority report a credit score of 680 or higher, which puts them in a reasonably competitive position when rates do move.
- Three-quarters have a current interest rate above 5%, and nearly half are sitting above 6%.
- The average current rate across all refinance prospects in the survey was 5.7%.
That 5.7% average is important context. It means a large share of prospective refinancers are not frozen out of the market by a pandemic-era rate they can never improve on. They are sitting at rates that become increasingly actionable as conditions shift.
Why They Want to Refinance
The survey data is clear on the primary motivation. Lowering the monthly payment or interest rate is the dominant driver, cited by 62% of refinance prospects as their main reason for refinancing.
The next most common motivators tell a more layered story. Accessing cash from home equity came in at 15%, and paying off other debt at 13%.
“Those two motivations often get bundled together,” Bass notes. “A borrower who wants to consolidate high-interest consumer debt while also pulling equity for a renovation is having a very different conversation than someone purely chasing a rate reduction. The product recommendation changes, the math changes, and the timeline changes.”
What’s Actually Holding Borrowers Back and What Would Change It
Here is where the data gets particularly useful. When the survey asked future refinancers what was currently holding them back, the responses paint a picture that goes well beyond rates being too high, though that does lead the list at around half of respondents.
The barriers worth paying attention to beyond rate levels include the following:
- The process feels daunting: a meaningful share of respondents, particularly first-time refinancers, cited it as a deterrent. Not the economics, the process.
- Credit or financial situation needs improvement: some borrowers self-select out before they’ve even been evaluated, assuming they won’t qualify.
- Confusion about whether the savings outweigh the costs: fewer than half of prospects said they feel “very confident” in their ability to calculate the break-even point on a refinance. That is the single aspect of refinancing where confidence is lowest across the board.
“That break-even gap is the one I see most often,” Bass says. “Calculating how long it takes for monthly savings to recover closing costs is not complicated math, but it is the thing borrowers feel least equipped to do on their own. That is a gap the right lender conversation can close in about ten minutes.”
This data makes clear that the barrier for a large share of today’s prospective refinancers is not purely economic, but more informational. They are not opposed to refinancing, they are just uncertain, and uncertainty tends to produce inaction.
So what would actually move them to act? The top motivators for future refinancers, in order, are:
- A meaningful drop in their monthly payment
- Interest rates falling to a level they want to take advantage of
- The ability to save more over the long term
- A personal financial change
- Proactive outreach from a loan officer they’ve worked with before
That last trigger is easy to underestimate. “A borrower who is intellectually ready to refinance but hasn’t started the process is often just waiting for someone they trust to confirm the math makes sense,” Bass says. “Proactive, personalized outreach from a loan officer carries more weight than most people in this industry give it credit for.”
The Misconceptions Still Shaping Borrower Behavior
One of the more striking findings in the data is the number of common misconceptions about refinancing that are still widely held. When asked about specific statements, a notable share of respondents believed things that are simply not accurate. A few examples stand out:
- A third of respondents believed you should only refinance when rates drop significantly, which ignores the many scenarios in which refinancing makes sense for reasons entirely unrelated to rates.
- About one in five believed you need at least 20% equity to refinance.
- A meaningful share believed that cash-out refinancing is only for people in financial trouble.
These misconceptions have real consequences. A borrower who thinks cash-out refinancing is a last resort will never bring it up as a strategic option. A borrower who thinks 20% equity is required may never pick up the phone. Education is not a soft benefit, it is a direct driver of whether a borrower even enters the conversation.
What Borrowers Want From a Lender
The survey also asked respondents what factors matter most when choosing a lender for a refinance. The top priorities, in order, are:
- Clear and transparent loan terms
- Getting the lowest interest rate
- Saving the most money over time
- Lowering the monthly payment
- Keeping closing costs low
Trust also plays a significant role. Over 80% of respondents said they would prefer to refinance with a lender they already know and trust. At the same time, more than half said they do not feel a strong loyalty to any specific lender, indicating that a preference for a familiar lender is not automatic, but must be earned.
“The lenders who will have the advantage when rates move are the ones engaging borrowers before they’re actively shopping,” Bass says. “Lead with transparency, explain the math clearly, and be there before the window opens.”
What This Means for Homeowners Right Now
The data reinforces a consistent theme: the refinance market is not dead, it is waiting. There is a large cohort of financially qualified homeowners monitoring rates who will move when the math makes sense for them. Many are already closer to that threshold than they realize.
For homeowners sitting on the fence, Bass offers a straightforward starting point: “The break-even question is the one worth starting with. If you know your current rate, your remaining balance, and roughly what today’s rates would produce for your payment, the calculation is straightforward. Most of the anxiety around refinancing dissolves once borrowers see the actual math laid out in plain terms.”
This piece will be updated as new data becomes available. The refinance landscape is shifting, and understanding the borrower psychology behind it matters as much as tracking rate movements.
