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Thursday, October 22, 2026

Talking Rates: Sales Meeting – Part I

How Loan Officers Can Explain
the 2026 Mortgage Rate Surge

    

Recently, Lenders Compliance Group was asked to host a meeting for a mortgage lender's sales team. The meeting was attended by 450 loan officers from across the country. Jonathan Foxx, our Chairman and Managing Director, hosted the meeting. We recorded it and obtained the transcript. We did not charge a fee. The format was a question-and-answer session in which loan officers asked us how to explain the surge in interest rates to their borrowers. 

Jonathan covered many scenarios, from simple to complex, reflecting borrowers' familiarity with financial conditions. We placed considerable emphasis on ensuring that the LOs' responses would comply with regulatory guidelines regarding contact with the public. The meeting lasted an hour, after which many LOs sent us additional questions. 

We have scheduled another compliance-related meeting with this lender on a different topic. If you would like us to host a free meeting, we would be glad to discuss the topic and schedule it. 

Please email us HERE and tell us about your meeting topic!

For this article, we selected several questions that should interest our newsletter subscribers. We edited the transcript for clarity and length. Questions are emboldened. The questions are grouped from simple (Part I) to technical (Part II). 

This two-part article is separated into simple and technical scenarios, as follows: 

  • Part I: Simple Questions
  • Part II: Technical Questions  

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INITIAL OPENING COMMENT  

Mortgage rates have jumped sharply this fall, and borrowers are noticing. According to Freddie Mac, the average 30-year fixed rate reached 7.28% as of October 1, 2026. That is the highest level since November 2023, up from 7.03% a week earlier and 6.34% a year ago. 

For loan officers, this creates a communication challenge. A first-time buyer often needs a short, reassuring explanation. A borrower who follows the markets wants to understand how the pricing actually works. In this meeting, I will discuss how to respond to both types of borrowers with a possible script for each. 

SIMPLE QUESTIONS  

The Bond Market  

Question: How do I explain the bond market's impact on mortgage rates?  

Answer: I think there are essentially two ways to answer. The first is what I would call a "one-sentence version." You could say:  

"Mortgage rates follow the bond market, and right now investors are demanding higher returns to lend money long-term, so borrowing for a house costs more than it did a few months ago."

But you may need a slightly longer version. In which case you could say:  

"Most people assume the Federal Reserve sets mortgage rates. (A quick, friendly correction builds credibility.) The Fed doesn't set mortgage rates directly, but they closely track the 10-year Treasury yield. Right now, both are moving up. The Fed raised the federal funds rate at its September 17th meeting, and the 10-year Treasury yield rose to about 5.29% on October 1st."  

This may be a bit too complex to understand, so provide an analogy, such as:  

"Think of your mortgage as a loan that gets packaged and sold to investors. Those investors could buy safe government bonds instead. When government bonds pay more, investors expect mortgages to pay more too, or they'll take the safer option. Right now those bonds pay over 5%, so mortgage rates have moved up with them." 

Rate Shock  

Q: I have a borrower who is upset about their interest rate. Although our underwriters approved their DTI, they are backing off over the payment. What should I say to them?  

A: I suggest that you take the payment conversation out of the abstract and make it real. That may seem counterintuitive, but it makes it concrete enough for them to decide. Percentages are abstract. Monthly dollars are not. 

Let's assume a $400,000 loan principal and interest at last year's 6.34%, which - hold on while I calculate it - comes to about $2,486 a month. At 7.28%, it's about $2,737 per month, roughly $250 more each month.  

So, you can run the numbers on the borrower's actual loan amount. That turns the conversation from "rates are bad" into "here's what this means for you."  

Panic  

Q: I have a borrower in full panic mode. She does not want to lock. She won't do an ARM. She is talking about staying in her apartment rather than buying a house because she's convinced the rate is going higher and higher. How can I get her to calm down?  

A: It's tough when the borrower panics. In my view, two facts can help calm nerves. They don't always work. Every borrower is different, of course.  

First, you can point out that today's rates are high compared with recent years but not unusual over the long run. Since Freddie Mac began tracking rates in 1971, the median 30-year rate has been about 7.23%. The historical perspective can help a lot!  

Second, loan types and borrower profiles. To that extent, a borrower can control part of their rate. A stronger credit score can lower an APR by nearly a full point. Down payment, loan type, discount points, and rate locks also matter. Government-backed loans can price differently, too: in early October, U.S. News reported FHA rates near 5.99% and VA rates near 6.84%.  

What Not To Say  

Q: What should I avoid saying to my borrowers? I don't want to overpromise and underdeliver. I don't want to be called a liar or accused of steering. I have a clean record, and I am going to keep it that way.  

A: Let's start with the obvious: Don't predict where rates are headed! Avoid pressure lines like "lock now before it gets worse" or "you can always refinance later." Nobody knows where rates are headed, and a future refinance isn't guaranteed. You must be careful with the words you use! Here's a better reply:  

"I can't tell you where rates will go. What I can do is help you choose a payment you're comfortable with at today's rate, and walk you through your options for locking or floating."  

If you need a script, here's one you can consider:  

"You've probably heard rates went up. Mortgage rates follow the bond market, and investors are currently demanding higher returns, partly because the Fed raised rates last month. The 30-year average is now a little over 7%, compared with about 6.3% a year ago.  

On your loan amount, that's such-and-such dollars more a month. The good news is that this is close to the long-term average, and we can do things to improve your rate, like taking into consideration the credit, points, and loan program. Let's look at what payment works for your budget."  

Bottom Line: Scenarios, Not Forecasts  

Whether the borrower is a first-time buyer or a bond-market enthusiast, the principle is the same. Explain what is driving rates, translate it into their monthly payment, and show them the levers they control.  

Every borrower eventually asks where rates are going. Walking through scenarios instead of making a prediction helps to keep you in compliance and treats the borrower as capable of weighing the risk.  

Part II: Technical Questions  

Some borrowers pose technical questions that require clear responses. A worthwhile, helpful reply builds rapport and supports a working relationship. In Part II, we discuss a few important technical questions borrowers pose. Stay tuned for Part II, coming soon!

__________________________ 

This article, Talking Rates: Sales Meeting - How Loan Officers Can Explain the 2026 Mortgage Rate Surge – Part I, published on October 22, 2026, is transcribed from a Zoom meeting hosted on behalf of a mortgage lender. The presenter was Jonathan Foxx, PhD, MBA, the Chairman & Managing Director of Lenders Compliance Group, founded in 2006, the first and only full-service mortgage risk management firm in the United States, specializing exclusively in residential mortgage compliance.

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