Fall’s mini-refinancing wave is already over
A brief September surge in mortgage refinancing activity appears to be wrapping up as mortgage rates climb.
After several weeks of gains, refinancing applications dropped 21% through Friday compared to a week earlier, according to Mortgage Bankers Association data. Mortgage rates reached a three-week high last week, averaging around 6.46%, according to the trade group.
“After the burst in refinancing activity over the past month, this reversal in mortgage rates led to a sizeable drop in refinance applications, consistent with our view that refinance opportunities this year will be short-lived,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.
Despite the drop, refinancing applications are still 16% higher than they were a year ago. Mortgage applications to purchase a home are holding more steady, dropping just 1% through Friday from a week ago.
Read more: When will mortgage rates go down?
Mortgage rates began falling before the Federal Reserve cut benchmark interest rates in mid-September, dropping from around 6.75% in mid-July to as low as 6.26% the week of the Fed cut. Rates in the 6.3% area put as many as 3.1 million homeowners “in the money” for refinancing, according to ICE Mortgage Technology.
But that period proved short-lived. Mortgage rates rose almost immediately after the Fed cut benchmark interest rates, making refinancing less attractive. Although Fed policy can influence mortgage rates, they most closely follow 10-year Treasury yields, which have moved higher in recent weeks.
Learn more: 8 strategies for finding the lowest motrgage rates right now
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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