Is refinance business dying?

by Justin da Rosa18 Dec 2015
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 Keith howard | 12/18/2015 11:34:22 AM

    28 years of refinancing mortgages has taught me not to sell rates. There is soooo much business left to get. I'm soooo glad everyone has a defeatist attitude about a rate hike. They are the same idiots that cannot even sell a low rate. I won't point out the massive amount of refi's I see and why, I'm living it shouting with joy that my competition is giving up. If you want to know why, your on your own.
    Right now the rate hike is just getting more idiots out of the business. The fishing in a barrel days are over, but if you know how to hunt, it's time for abundance.

  • by Bill Morris | 12/18/2015 11:38:29 AM

    Read Keith's statement again. He states it perfectly. He has 5 years seniority on me in this business. I am excited for those that aren't in for the long haul to move on to something else!!

  • by realist | 12/18/2015 11:58:05 AM

    We are going to see the biggest refi boom in history in 2017-2018. The FED will be forced to reverse course in mid 2016 as we will be in a massive recession and stock market collapse due to over leverage in bond market. Will make 2008 financial crisis look like picnic. We will see QE4-QE infinity and negative interest rates. Will see the 10 yr. go below 1.0% which will yield 30 yr. fixed rate mortgages at 2.0%. It's going to be a bonanza.


Should CFPB have more supervision over credit agencies?