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. 

According to recent data from Cotality, U.S. homeowners are now sitting on over $34 trillion in home equity—a historic high. 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. 

1. Guiding clients on improving credit and identifying the right lender.

   Advisors can demonstrate their resourcefulness by being familiar with lenders that offer competitive rates and a streamlined closing process. This not only helps clients achieve better cash flow or greater home purchasing power but also elevates the overall client experience. In doing so, advisors can reduce the risk of clients forming new relationships with other advisors or banks.

   
   

2. Engaging younger clients and the next generation.

   By advising children and grandchildren of clients on home purchases, advisors can strengthen existing relationships while establishing trust with future generations. This multigenerational engagement helps ensure continuity and deepens the advisor’s long-term value proposition.

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: 

• Home prices have soared to $423,100 as of January 2025, up from $329,000 in January 2020, according to U.S. Census Bureau data. 

• Younger homeowners face affordability challenges due to high home prices, student loan debt, and a cooling job market. 

• 85% of homeowners have mortgage rates below 5%, creating a “golden handcuff” effect that discourages selling or refinancing at higher rates. 

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. 

Let us help you stay ahead of the curve—with technology, tools, and lending capabilities designed to support real estate as part of a modern wealth strategy.