After a short boom, higher rates are driving down mortgage refis

The mortgage refinance boom was short-lived.

The rebound in interest rates has slowed borrowers seeking to refinance their mortgages, CNBC reported. Mortgage application volume fell 5.6 percent from the previous week — but applications were still 24 percent higher year-over-year because of the recent increase in refinancing.

After rates fell for four straight weeks to the lowest level in more than a year, the average contract interest rate for 30-year fixed-rate mortgages ticked up to 4.4 percent from 4.36 percent. The shifts in borrower trends highlight how sensitive buyers are in the current market, the report said.

“As quickly as refinance activity increased in recent weeks, it backed down again in response to the rise in rates,” said Mike Fratantoni, the Mortgage Bankers Association’s chief economist. “However, this spring’s lower borrowing costs, coupled with the strong job market, continue to push purchase application volume much higher.”

Refinance applications fell 11 percent last week after the sharp drop in rates created a new influx of refinancing in the past month. Rates are still a quarter of a percentage point lower than a year ago — but because many borrowers have refinanced at lower rates, the pool of applicants has thinned.

Applications were 42 percent higher than a year earlier, but the percentage changes are skewed because of the small base of applications. [CNBC] — Meenal Vamburkar