Homeowners Are Refinancing With Their Existing Lenders. Are They Leaving Money on the Table?
Homeowners may pay more by using their existing lender for a refinance.
As homeowners realize they can save money with a refinance, fewer are saving as much as possible by comparison shopping, according to a new report from ICE Mortgage Technology.
Instead, many are sticking with their existing loan servicer (the company that manages the account and collects payments) and maybe one other lender. And that can be a mistake.
In November, we reported that homeowners are feeling increasingly warm towards their mortgage lenders. And it may be that some are translating that into misplaced loyalty when they skip getting refinance quotes from other lenders.
Why might that loyalty be misplaced? First, because mortgage services aren't the lenders that are growing more popular. They're the ones, according to a different J.D. Power survey, who are becoming increasingly unpopular.
And, secondly, because any loyalty is not reciprocated. Mortgage lending is, first and foremost, a business, and good customer relations are an integral part of that. But each lending decision is a cold, hard calculation. And nobody should expect their loyalty to be reflected in the rate they pay.
In other words, a lender may offer an existing customer a very competitve refinance rate. But it's at least as likely not to do so.
How Big a Problem Is Not Shopping Around?
percentage points, translating to an average monthly saving of about $200."
"ICE’s 2025 Borrower Insights Survey found that 78% of borrowers only shop one or two options before choosing a lender,” said Tim Bowler, President of ICE Mortgage Technology. That statistic makes us sad.
Stats for the Average Refinancing Homeowner
| Loan Feature | Stat |
|---|---|
| Lenders shopped | 1-2 |
| Original mortgage date | 2023-2025 |
| Balance | $505,000 |
| Credit score | 762 |
| Rate improvement | 0.92% |
| Monthly savings | $200 |
Why Comparison Shopping Is Crucial
"Shopping around for a home loan will help you get the best financing deal," says the Federal Reserve. "Shopping, comparing, and negotiating may save you thousands of dollars."
Of course, that doesn't mean borrowers should avoid their existing lender, which might have good reasons to offer the best possible deal.
"If you plan to refinance, you may want to start with your current lender," suggests the Fed. "That lender may want to keep your business, and may be willing to reduce or eliminate some of the typical refinancing fees. For example, you may be able to save on fees for the title search, surveys, and inspection. Or your lender may not charge an application fee or origination fee. This is more likely to happen if your current mortgage is only a few years old, so that paperwork relating to that loan is still current. Again, let your lender know that you are shopping around for the best deal."
Knowing that a customer who is thinking of refinancing will be getting quotes from other lenders may incentivize the existing company to dig deep for the best possible deal. But borrowers can't be sure about that. And, even if the current lender does its best, others may be able to beat it.
Shopping Around Is So Easy
As the Fed says, thousands of dollars could be at stake. And yet, nowadays, borrowers can carry out a decent comparison shopping exercise, requesting quotes from multiple lenders, within a couple of hours while sitting on their couch or at their home office desk.
Those who do so could earn the highest hourly pay rate they will ever achieve.
