Written by: Internal Analysis & Opinion Writers
As mortgage rates have dipped recently, refinancing activity has surged — and servicers are holding onto more of those refinanced loans than at any time in the past three and a half years.
According to Q3 2025 data from ICE Mortgage Technology, refinance-loan retention rose to 28%, the highest figure recorded since early 2022. The majority of the activity has been driven by traditional rate-and-term refinances, which made up 62% of all refinance volume in October. These are borrowers seeking to lower their interest rate or monthly payment without tapping into equity.
Most of these refinancing borrowers had loans originated between 2023 and 2025. In September and October, approximately 95% of refinance transactions involved loans that were less than three years old. For many, the new rate was nearly a full percentage point lower than their existing loan, reducing their monthly mortgage payment by about $200 on average.
The data also highlights a notable divide between banks and non-bank servicers. Non-bank lenders retained 35% of refinancing customers, while traditional banks only held onto 13%. The figures underscore the agility and competitiveness of non-bank firms in a volatile rate environment, where fast execution and digital servicing platforms provide an edge.
Even modest rate drops appear to be enough to drive strong borrower interest. With many homeowners still sitting on loans written at peak rate levels, the opportunity to lock in even a slightly lower rate is meaningful. For borrowers who missed earlier refinancing waves, the current dip presents a second chance to lower their monthly costs.
At the same time, higher retention rates benefit mortgage servicers by preserving servicing volume and improving revenue stability. Retaining customers also allows lenders to reduce marketing expenses and build longer-term customer relationships — something particularly important in a slower purchase market.
Still, the refinance uptick reflects how reactive the market remains to rate movement. If rates begin to rise again, the window of opportunity could close quickly. But if downward momentum continues, more borrowers — especially those from the 2023 and early 2024 origination pool — may find themselves back in the money to refinance.
Industry analysts are closely watching the Federal Reserve’s next moves. While the broader market anticipates potential rate cuts in the coming months, any upward inflation surprise or economic uncertainty could stall the trend. Until then, the refinance wave appears poised to continue — and servicers who can move quickly stand to gain the most.
