Mortgage demand plummets to lowest level in a year

Cash-out refinancings were down 13% month-over-month

National /
May.May 18, 2021 10:39 AM
Lower demand for refinancings has caused purchase loans to take a larger share of the market. (iStock)

Lower demand for refinancings has caused purchase loans to take a larger share of the market. (iStock)

The once red-hot mortgage market is cooling down.

Mortgage demand fell in April to its lowest level in almost a year, according to Inman, citing a report from the data firm Black Knight.

The reason: refinancings have fallen off. Cash-out refinancings were down 13 percent from March to April, while rate-and-term refinancings plummeted 20 percent, per the report. Black Knight says there are 14.5 million homeowners who could still refinance their existing mortgage at a lower rate.

Lower demand for refinancings has caused purchase loans to take a larger share of the market. Those made up 55 percent of total originations in April, up from 52 percent in March, according to Black Knight.

Historically low mortgage rates have been the norm for some time now, but that may soon end. Economists at Fannie Mae project rates on 30-year fixed-rate mortgages to reach 3.4 percent by end of 2021 and then rise to 3.6 percent in 2022. That’s up from 3.1 percent last year.

Lenders have also been tightening their standards in the past year. Overall, mortgage credit availability — an indicator for lenders’ willingness to issue mortgages — is at its lowest level since 2014, according to recent data from the Mortgage Bankers Association.

Last year, mortgage rates plunged to historic lows, encouraging would-be buyers into the market and spurring refinancings. (Rates have since gone up.) But the availability of loans dropped 35 percent year-over-year as lenders tightened standards to avoid lending to buyers with shaky finances.

[Inman] — Keith Larsen





    Related Articles

    arrow_forward_ios
    Pyramid Management Group's Stephen Congel and Crossgates Commons in Albany (Pyramid Management Group)
    Pyramid lands refi to keep shopping center afloat
    Pyramid lands refi to keep shopping center afloat
    3 New York Avenue in Jersey City, NJ (Google Maps, iStock)
    Developers land $97M for Jersey City multifamily
    Developers land $97M for Jersey City multifamily
    Hudson Meridian Construction Group founder Bill Cote and a rendering of the Science Park Apartments planned at 201 Munson in New Haven (Hudson Meridian Construction Group)
    Beleaguered New Haven multifamily project coming back to life
    Beleaguered New Haven multifamily project coming back to life
    World Wide Group's James Stanton, Suchman Group's Jeffrey Suchman and rendering of 66 Nowedonah Avenue in Water Mill NY (World Wide Group, Getty Images, The Water Mill Crossing)
    JS Squared gets financing to build 38 Water Mill townhomes
    JS Squared gets financing to build 38 Water Mill townhomes
    BRP, BlackRock nab $91M for LI project
    BRP, BlackRock nab $91M for LI project
    BRP, BlackRock nab $91M for LI project
    Jonathan Cortell of L+M Development Partners in front of 250 Georgia King Village in Newark (L+M Development Partners, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
    Developers land financing for Newark affordable housing
    Developers land financing for Newark affordable housing
    (Illustration by The Real Deal)
    More than 14K LI residents in mortgage delinquency
    More than 14K LI residents in mortgage delinquency
    (Getty Images)
    Hurricane Ida damage could disrupt thousands of mortgage deals in NY, NJ
    Hurricane Ida damage could disrupt thousands of mortgage deals in NY, NJ
    arrow_forward_ios

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

    Loading...