One-third of homeowners say they are either currently refinancing or likely to refinance within the next two years, despite mortgage rates remaining well above pandemic-era lows, according to new survey data released by Refi.com.
The findings challenge a common industry narrative that refinance activity remains largely dormant because millions of borrowers are locked in mortgage rates below 3% during 2020 and 2021.
"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," said Kyle Bass, production business manager at Refi.com. "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% or higher and are actively evaluating their options."
The survey, conducted by Mortgage Research Center, LLC, gathered responses from more than 1,000 homeowners nationwide.
Among homeowners considering a refinance, three-quarters currently have mortgage rates above 5%, while nearly half report rates above 6%. According to Refi.com, that leaves many borrowers within range of meaningful savings should rates decline even modestly.
The data also suggests younger homeowners could help fuel future refinance demand. More than half of respondents interested in refinancing are members of Generation Z or the Millennial generation, reflecting buyers who entered the housing market during the recent higher-rate environment.
Most prospective refinancers also reported credit scores of 680 or higher, indicating many may be financially positioned to act if market conditions improve.
When asked about their primary motivation for refinancing, 62% cited lowering their monthly mortgage payment. Another 15% said they would refinance to access home equity, while 13% pointed to debt consolidation.
However, interest rates are not the only factor keeping borrowers on the sidelines.
Survey respondents also reported uncertainty about qualification requirements, confusion about the refinance process, and difficulty determining whether refinancing would actually save them money.
Fewer than half of homeowners surveyed said they felt very confident calculating a refinance break-even point.
"The break-even calculation is where many homeowners get stuck," Bass said. "The math itself is simple, but translating it into a real decision is where the hesitation comes in. Once borrowers see it clearly, the path forward becomes much easier to evaluate."
The survey also identified several misconceptions that may be discouraging homeowners from exploring refinance opportunities. About one-third of respondents believe refinancing only makes sense when interest rates fall significantly, while roughly one in five believe homeowners need at least 20% equity to qualify. Others associate cash-out refinancing primarily with financial hardship.
In contrast, respondents said the factors they value most when evaluating a refinance include clear loan terms, lower interest rates, long-term savings, reduced monthly payments, and minimal closing costs.
What It Means
The findings suggest the refinance market may be larger than many assume.
While ultra-low-rate borrowers remain largely insulated from today's rate environment, a growing segment of homeowners purchased or refinanced during the past several years at substantially higher rates. If mortgage rates move lower, even modestly, those borrowers could represent a meaningful source of refinance volume.
The survey also highlights an opportunity for lenders and LOs to focus on borrower education. Many homeowners appear less constrained by rates alone than by uncertainty around qualification requirements, refinance costs, and break-even calculations. For originators, helping borrowers understand those factors may prove just as important as waiting for the next rate-cut cycle.
*This article was primarily written by a human author. AI tools were used in a limited capacity for research assistance or light editing.
