The Right Time To Refinance Is Before the Rates Slip Below 6%

If you’re waiting to buy a home until mortgage rates fall below 6%, you’re likely in for a long wait. 

While there was a dip in early 2026, most forecasters insist that 30-year-mortgage rates will be parked in the 6% range for the foreseeable future. 

Still, there is hope that rates will start to fall at least into the low end of 6%, and if you already have a mortgage, now would be the perfect time to get your affairs in order to refinance.

You may not immediately think so, but if you’re one of the borrowers who bought in 2022 to 2024 and have a rate at 6.75% or above, you could potentially be positioned to save over $1,000 a year by refinancing. 

If you can get your lender on the phone.

The refinance math 

A new analysis of mortgage data by the Roosevelt Institute shows that mortgage refinancing could deliver significant benefits to millions of working- and middle-class homeowners as interest rates fall.

Authors Brad Lipton and Peter Carroll, both former senior Consumer Financial Protection Bureau (CFPB) officials, found that more than 4.2 million homeowners who took out mortgages from 2022 to 2025—roughly 1 in 4 borrowers—would benefit from refinancing if rates fall to 6%, including approximately 1.1 million low- and moderate-income homeowners.

To be considered “in the money” for this 6% rate, borrowers must currently have mortgage interest rates of 6.75% or higher, which provides the minimum 0.75 percentage point reduction generally required to offset the closing costs of a new loan.

From 2022 to 2025, a substantial number of borrowers took out loans with interest rates of roughly 6.5% to 7.5%, putting them in prime position to refinance if rates start to fall again.

And the math is attractive. Consider a homeowner who took out a $150,000 mortgage at a 7.25% interest rate in 2024. They could save $884 each year by refinancing to 6.5%. 

Another example: A homeowner with a $199,000 mortgage from 2024 at 6.875% could save about $100 per month by refinancing to 6.125%. That’s $1,200 a year that could go toward other housing costs. 

Why you should act before rates fall below 6%

What’s unique about the Roosevelt Institute’s report is that it specifically explores the untapped potential of mortgage refinancing as a tool for improving the financial status of low- and middle-income households. 

And yet, the benefits of refinancing are disproportionately enjoyed by wealthier homeowners, leaving a massive “equity gap” for vulnerable families. 

The reasons are varied, with the authors noting high closing costs and complex documentation preventing lower-income borrowers from accessing more affordable rates.

But an often overlooked reason is lender capacity constraints. 

During “refi booms” when interest rates drop, lenders often experience an influx of calls and interest.

The report cites a FDIC CFR Working Paper that examined the “supply-side capacity constraints in the mortgage market” back in 2025 and estimates that supply constraints “led to 12% of marginal borrowers failing to refinance during the 2020-2021 boom.”

But why?

“I think lenders prioritize higher-income applicants because they perceive it as easier,” explains Lipton, director of the Corporate Power and Financial Regulation division with the Roosevelt Institute. 

“Higher-income families have mortgage balances that are larger on average, and they may have more steady W-2 income, which helps with underwriting.”

Because of that, lenders may tailor their marketing toward these high-income households or actively screen calls to prioritize them when interest in refinancing is at its peak.

However, as Lipton rightly points out, this prioritization could actually be “illegal, if lenders treat people differently in ways that are prohibited under the Equal Credit Opportunity Act.”

One of the solutions Lipton and Carroll recommend that would help lenders and borrowers alike is for the CFPB to modify the ability-to-repay and qualified mortgage rules to create a safe harbor for refinances.

“I think the CFPB rules that provide important guardrails around mortgage lending generally are a bit too rigid when it comes to refinancing,” Lipton adds. 

“These are families that already have payment histories on their existing mortgage. It doesn’t make a whole lot of sense to ignore that history and just apply the same rules that apply to people buying a house for the first time. I think this would affect lender behavior in some cases.”

Is it the right time for you to refinance?

The first step in deciding if you should refinance is to speak to your lender, and as we’ve seen, doing that sooner rather than later can help you beat the rush and be in a better position if rates fall. 

Using a refinancing calculator can also help you determine whether making a change with your mortgage is the right move for you now.

Finally, Lipton recommends the CFPB website as a “first stop” as it shares some “great, objective resources on refinancing.”