“Will refinances go down? I think the answer to that is a resounding yes; there is an uptick to refis when rates are low, but you’re already seeing fewer of these deals,” Robert Bajakian, vice president of mortgage lending for Guaranteed Rate, told Mortgage Professional America. “There’s a 70% chance of the Fed increasing rates in December and markets are already pricing that in.”
As a result, refinances are down.
According to the Mortgage Bankers Association, its refinance index was down 2% week-over-week for the week ending November 6 -- which is likely the result of increasing mortgage rates.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 4.12% from 4.01%. That’s the highest rate for these loans since August 1.
Meanwhile, the average 30-year fixed-rate for jumbo loans increased to 4.04% from 3.9%. 30-year FHA
-backed loans came in at an average rate of 3.87% -- up from 3.81%.
Still, refinance share accounts for 59.8% of all mortgage activity. That chunk of activity is expected to continue dwindling as rates continue along their upward trajectory.
And that means the good times may be coming to an end for brokers. At least for now.
“We always joke that refis are the gravy,” Bajakian said. “But purchases should always be the main focus; if they aren’t you probably aren’t in business anymore.”
The easy money may be coming to an end – with rates expected to rise, brokers will have fewer refi deals, according to on industry veteran.