A client calls saying their neighbor just refinanced and got a rate that starts with a 6. They locked their own loan two years ago at 7.5% and have been ignoring the market ever since, assuming nothing’s changed enough to matter. This week, something did.

Purchase and refinance rates tend to track closely together, with refinance rates typically running a bit higher. When the gap is narrow, it can make the refinance conversation worth having for anyone still sitting on a rate from the 7s—but the right next step depends entirely on the client’s loan size, timeline, and whether they’re willing to pay for a lower rate upfront.

The math

Run the numbers instead of the headline. A client with a $350,000 balance at 7.5% is paying roughly $2,447 a month in principal and interest. Refinance that same balance at 6.861% and the payment drops to around $2,296—a difference of about $151 a month, or roughly $1,800 a year.

Let’s consider some more numbers. A client above the area’s conforming loan limit is in jumbo territory, where the math moves fast on a large balance. Say the 30-year fixed rate lands at 6.5%, putting the monthly cost at roughly $632 in principal and interest per $100,000 borrowed. Scale that to a $900,000 jumbo loan and the payment runs close to $5,689 a month, with total interest over the life of the loan landing near $1.15 million. For clients at that balance, even a small rate shift is worth thousands of dollars a year—which is exactly why they should be the first ones a firm calls when the market moves.

Refinancing isn’t free, and the savings above only start paying for themselves once the client clears the break-even point—the number of months it takes the monthly savings to cover what they spent to refinance. A client who plans to sell or move within two years may not clear that line at all, no matter how attractive the new rate looks on paper.

Discount points

For clients planning to stay in their home long-term, buying the rate down further with discount points is an option. One point typically costs 1% of the loan amount and lowers the rate by roughly a quarter of a percentage point.  client confident they’ll stay in the home five-plus years can come out ahead by points. A client who might relocate for work, downsize, or refinance again within a few years is better off keeping that cash and skipping the points entirely.

One rate doesn’t tell the whole story

Purchase and refinance rates aren’t quoted off the same number, and clients often don’t know that. Lenders price refinances slightly differently than purchases, which is why a client can see “rates fell” in a headline and still get quoted something higher than they expected. Credit score and loan-to-value ratio widen that gap further—two clients refinancing the same day can see meaningfully different offers based on those two factors alone.

What to tell clients

For anyone above 7% on their current rate, run a break-even calculation using their actual loan balance and their actual timeline in the home. For anyone below 7%, there’s no urgency yet, since the spread doesn’t clear the cost of refinancing for most borrowers.

For clients above the conforming loan limit, flag the jumbo-specific numbers separately. The dollar impact of a rate move is large enough to warrant its own conversation in the standard refinance pitch. And for anyone planning to stay put for the long haul, put discount points on the table as a genuine option to consider.

Pull the client’s current payoff statement, and run their specific break-even number before the conversation goes any further—that’s the only way “rates fell” turns into an actual decision.