Avoid surprising your clients with mortgage rate and program changes by communicating consistently and transparently.

Navigating a landscape in which mortgage rates continue to fluctuate can be particularly frustrating for investors, borrowers, and brokers. Lenders who communicate poorly can cause added frustration in such an environment.

Lenders have a duty to their customers to effectively communicate any upcoming changes in rates or program guidelines and to set expectations for how market influences might affect programs or rates in the future. This is especially true in an environment in which margins are razor thin and a higher interest rate can make or break a deal’s profitability.

As a private lender, what are the best practices you can employ to ensure your clients don’t face any unwanted surprises that could derail their upcoming investments?

Establish Expectations

Depending on your capital stack, fluctuations in rates can have either a significant or minor impact on your business. Private lenders dependent on capital partner relationships and selling their paper will need to think about how they are pricing their loans today to ensure profitability in the future.

One of borrowers’ biggest misconceptions is that if the Federal Reserve lowers rates tomorrow, then private lending rates will also immediately drop. Usually, this isn’t the case. Private lenders with capital partner relationships are often projecting where rates will sit for three to six months in the future as they are thinking of the impending sale. So, borrowers may experience unexpected rate adjustments, both positive and negative, when they are least expecting it.

This is why private lenders must have transparent communication with their clients. Rate changes should never come as a surprise to a lender; sudden changes should be the exception, not the norm. Letting borrowers know about any impending rate or product changes should be communicated ahead of time to allow clients to lock rates if applicable or, at the very least, not be caught completely off guard when changes are implemented.

It’s a good idea to establish a regular cadence of communication with your clients, whether it’s weekly, twice a month, etc. Doing so allows your customers to keep an eye out for regular communications, even if your weekly update is “rates are holding firm,” and allows them to plan their businesses more efficiently. Even if you don’t have a definitive date or time frame for when changes will be going into effect, providing the courtesy of a heads-up and saying you anticipate rate changes to affect certain programs in the coming weeks can help your clients get their businesses in order.

Explain the Why

As important as it is to notify your clients about rate and product changes, whenever possible, you also try to explain the reasoning behind those changes. For direct borrowers, providing a general explanation as to the timing of rate fluctuations, what is currently affecting rates and products, and consistency with messaging across your organization can provide greater understanding for your clients and allow them to gain deeper insight into the market, including market events that are not only affecting you as a lender but also affecting others in the space.

If you are a lender working with more of a wholesale audience, it is critical to the success of your broker and correspondent lending partners to relay why rates and products are changing, because these clients will need to relay the information to their own borrowers. Not understanding why changes are happening or being unable to accurately relay all changes to their clients can cause headaches, bad customer experiences, and unnecessary delays in their origination process. It is your responsibility as their lender to empower them with the knowledge they need to successfully update their clients about any changes that could affect their flow of business.

You may also want to consider hosting monthly training with your customers to explain updates in more depth and give customers time for questions and answers.

Best (and Worst) Practices

As you develop an appropriate cadence for your business to communicate rate changes and other product updates, it’s important to think about best practices for appropriately delivering messaging and what types of media tend to work best when communicating these updates.

First, there is no one-size-fits-all solution for every private lender. As you develop your strategy, consider the methods of communication your clients are already used to and also where they are most likely to see these updates. When it comes to announcing changes, whether it’s rate fluctuations or product updates, an elevated level of visibility is incredibly important. These updates need to be communicated through a variety of channels to achieve the greatest visibility.

If you communicate with your clients via email, sending out regularly scheduled emails that cater just to the topic of rate and product changes is a good place to start. Sending these updates on the same days of the week at the same time and with the same frequency allows your customers to look for them regularly and gives them time to prepare for changes.

If you have a client portal your clients use regularly, you may want to also broadcast messaging within that portal so they can view rate and product updates when they log in. A client portal is something they would already be familiar with and, therefore, would be a logical place to include updates that might affect any new deal submissions. If you don’t have a client portal but you know customers frequent your website to submit deals, include verbiage on various parts of your website (e.g., your loan programs page and application page) noting upcoming changes to rates and programs.

Also, consider relying on your sales team to convey notice about rates and program updates. Including a note about upcoming changes in email signatures can be an easy way to alert clients and ensure the discussion comes up naturally the next time the sales team member speaks with their clients. Sales team members can also schedule a call with their clients to ensure they know about the changes and answer any questions, although this strategy typically only works for smaller pipelines. For larger pipelines, conducting recurring monthly training can be just as effective.

Keep in mind that your communication should include not only what changes are coming or happening but also when those changes will take effect. Avoid the need to alert customers of changes that are “effective immediately” because you delayed communication. There will likely be instances where changes to your rates or programs will need to be implemented immediately; however, whenever possible, give your clients an effective date that allows them to digest the information and ask questions so they can fully understand the potential impact before the changes officially go into effect.

Finally, avoid any scenarios in which your change implementation process completely halts your clients’ flow of business. In some recent instances, for example, some private lenders have reacted to rate fluctuations by shutting off the ability to lock rates until they have reestablished pricing. There is no better way to drive your clients to look for another lender than by announcing they cannot submit a loan and rate locks are temporarily unavailable without any other notice. Whether you work with investors directly or wholesale partners, your business impacts their livelihoods; at a minimum, they deserve the courtesy of knowing what changes are on the horizon.

Buckle Up and Be Prepared

Rate fluctuations show no sign of calming down as we enter 2025. If you haven’t developed a strategy for communicating these changes to your customer base, now is the time to start. By providing your customers not only with notice of changes but also insight as to how shifts in the market are affecting your programs and rates, you can be a better lender partner and better prepare clients for what is to come. Doing so will help set them up for long-term success and strengthen your client relationships.