Mortgage rates are going up, and homeowners are abandoning refinancings

Lenders focusing on adjustable-rate mortgages and home-equity loans instead

New York /
Mar.March 26, 2018 11:00 AM

Brownstones in Park Slope (Credit: Matthew Rutledge via Flickr)

Refinancings are comprising their lowest portion of the mortgage industry in more than 20 years.

In 2017, the industry research group Inside Mortgage Finance reported that just 37 percent of mortgage-origination volume happened due to refinancings, which is the lowest level since 1995, according to the Wall Street Journal. The number is expected to drop again this year.

Refinancing activity dropped by $366 billion in 2017, while the overall mortgage market dropped about 12 percent to $1.8 trillion. Rising rates have also meant that not as many homeowners are eligible for a refinancing, with the number of potential borrowers at just 2.67 million, the lowest amount since 2008.

Although home-purchase activity has held up so far, the combination of rising interest rates, low housing inventory and high housing prices could all threaten this in the long term.

Lenders have started to focus more on home-equity credit lines and adjustable-rate mortgages, as initial rates for them are not rising as quickly, in an effort to keep business strong.

“The market has just gotten so very competitive,” Ed Robinson, head of Fifth Third Bancorp’s mortgage business, told the Journal, “because every loan matters.” [WSJ]Eddie Small


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Seth Weissman, Financing
Urban Standard wants to rescue property owners from high interest rates
Urban Standard wants to rescue property owners from high interest rates
From left: Michael Dell with 25 Water Street, Alex Sapir with 261 Madison Avenue and Marc Holiday with One Madison Avenue (Getty, Edge Funds, Sapir Organization, SL Green)
Office properties (yes, office!) got Manhattan’s biggest December loans
Office properties (yes, office!) got Manhattan’s biggest December loans
Harbor Group International CEO Jordan Slone (Getty, Harbor Group, YouTube)
Jordan Slone and his $1.6B want to fund your rentals
Jordan Slone and his $1.6B want to fund your rentals
cliffside, building, money
$16B in CMBS loans nearing cliff in NYC
$16B in CMBS loans nearing cliff in NYC
Haute & Boss's Victor Hernandez
Unfinished Vero Beach estate hits market for record $60M
Unfinished Vero Beach estate hits market for record $60M
(Photo Illustration by The Real Deal with Getty)
RealPage faces another class-action lawsuit, this time in Florida
RealPage faces another class-action lawsuit, this time in Florida
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...