That’s how many months it’s been since there was this little refinancing activity, a symptom of rising mortgage rates.
The Mortgage Bankers Association’s refinancing index, a measure of application volume, fell last week to its lowest level since late January 2020, before the onset of the pandemic. At the same time, the group’s measure of interest rates showed both the 30-year and 15-year fixed mortgage were averaging their highest levels in eight months. Those higher rates—3.30% for a 30-year and 2.59% for a 15-year—have left homeowners with less and less incentive to seek a more favorable interest rate, the group said Wednesday in its weekly report.
The record low interest rates of last winter—the average 30-year mortgage rate hit an all-time low of 2.85% in December, by the association’s measure—fueled a frenzy of real estate purchases as well as refinancing activity, but the appeal of refinancing is much more vulnerable to higher rates, said Richard LaNasa, president of Angel Oak Home Loans, an Atlanta-based lender. While refinancing started to drop off as soon as rates crossed 3%, prospective homebuyers aren’t likely to be deterred by the uptick, he said.
“As soon as rates go into the 3.15s, three-and-a-quarters, people are so used to hearing 2s, it will take them some time to adjust,” he said. “The purchase market will stay strong even if rates go into the 4s or 5s.”
Many forecasters expect rates to continue to rise in the coming months. The Mortgage Bankers Association predicts the average 30-year to rise to 4% by the end of 2022—just shy of the average over the decade leading up to the pandemic.
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