Is refi business dying?

by Justin da Rosa18 Feb 2016
Now that the record-low rate era has come to an end, so too has the refi era, according to one veteran originator.

“There are two types of refinance clients; rate-driven and cause-driven,” Larry Penilla, an originator with A&M Mortgage Group, told Mortgage Professional America. “Rate-driven refinances are gone, but we can still expect cause-driven refi business; that business usually accounts for 15% of our deal, though.”

That 15% is a far cry from the rate of refinances brokers have become accustomed to. Over the past few months, it wasn’t unusual for refinance applications to account for more than 50% of all applications.

Those days, however, seem to be drawing to a close – especially in light of the Federal Reserve’s decision to increase its target for the overnight rate; the first such rate move since June 2006.
The latest refinance application stats were released hours prior to that Fed decision.

According to the Mortgage Bankers Association, refinances accounted for 60.7% of all applications week-over-week for the week ending December 11, up from the previous week’s mark of 58.7%.

That increase was likely due to an influx of last-minute rate-driven refi clients hoping to take advantage of the last week of record-low rates.

It remains to be seen how refinance activity will react to the increase in rates; increases that have already been implemented by most big banks.


  • by Refi guy | 2/18/2016 12:24:44 PM

    Just depends on your programs. No closing cost lenders are booming . Even a half percent drop sends us into overdrive

  • by MLO | 2/18/2016 2:36:13 PM

    I can only speak from my current business. We are broker licensed in NY, NJ, CT and FL and are still doing a very large amount of refinances. The FED raising rates did nothing mortgage rates. As treasuries continue to rise, rates continue to fall. This article doesn't really speak to what we are seeing out there at all.


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