Mortgage Rates Are Dropping. Are Your Clients Prepared?

As mortgage rates begin to decline in 2025, Registered Investment Advisors (RIAs) are facing a unique opportunity to help clients rethink one of the largest assets on their balance sheets: home equity.

Yet many of these homeowners aren't leveraging this wealth. Instead, they're focused on paying off mortgages, with 40% of households now owning their homes outright, up from 33% in 2010.

For advisors, this presents a clear opportunity to bring real estate into the financial planning conversation, especially as interest rates shift. The value advisors can add is two-fold and spans multiple generations of client relationships.

A way to engage younger clients and children and grandchildren of clients is to provide guidance on home purchases. This affords advisors the opportunity to build or strengthen relationships with clients' heirs.

Key areas where financial advisors can assist include guidance on boosting the borrower's credit score and helping them find a lender. An advisor can demonstrate their resourcefulness by being aware of lenders who offer competitive rates and a streamlined closing process. This enables buyers to have potentially better cash flow or greater home purchasing power coupled with an enhanced client experience. Similarly, it removes the risk that buyers may build a relationship with another advisor or a bank.

📉 Falling Mortgage Rates Could Signal a Return of Cash-Out Refinancing

In 2021, low interest rates fueled a surge in cash-out refinancing as homeowners tapped their equity while locking in better terms. But as interest rates rose, this trend slowed sharply.

Now, that's changing again.

🔍 Goldman Sachs research indicates that cash-out refinancing activity may rebound once mortgage rates fall below 6.1% — a threshold that could be reached soon if current trends continue.

This means RIAs should begin preparing clients now for what could be a major liquidity event through their home equity.

🏡 Why Homeowners Aren't Moving — and What It Means for Advisors

Understanding the current real estate environment is essential for RIAs offering financial planning services:

Younger homeowners face affordability challenges due to high home prices, student loan debt, and a cooling job market. Despite these headwinds, falling mortgage rates could re-open the door to strategic use of home equity.

💡 Home Equity Planning: What Should RIAs Be Doing Now?

As interest rates decline, now is the time for RIAs to incorporate home equity planning into client reviews. Here are key questions to guide those conversations:

• Should clients consider cash-out refinancing to fund business investments, tuition, or real estate purchases?
• How would tapping home equity affect their overall portfolio strategy or tax exposure?
• Are younger clients leveraging all available options to upgrade housing or reduce debt burdens?

This is where access to a trusted private banking fintech partner can make a difference.

🏦 How Our Fintech Platform Supports Real Estate Wealth Strategies for RIAs

At Fispoke, we provide RIAs with a suite of private banking tools built specifically for the high-net-worth and mass affluent market. Our services include:

• Custom real estate lending solutions, including home equity lines and credit options
• Liquidity access tied to real estate and other alternative assets
• Integrated financial planning tools that help RIAs model the impact of borrowing or refinancing

Whether your client is seeking cash flow flexibility or exploring new investment opportunities, our platform empowers you to deliver comprehensive, real-time solutions.

📣 Take Action Before the Mortgage Market Moves

As mortgage rates in 2025 continue to shift, proactive RIAs have a chance to deepen relationships by guiding clients through their home equity options.