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Record-low mortgage rates may now be a headline of the past.

The recent sharp rise in interest rates is now taking a toll on mortgage refinance demand, as the number of borrowers who could benefit shrinks.

Applications to refinance a home loan fell 5% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. They were also 43% lower compared with the same week one year ago. That is the first year-over-year drop since March 8, 2019. Last year at this time mortgage rates fell dramatically as fears of the coronavirus hit financial markets. That caused a large spike in refinance demand, hence this year’s comparison. 

The refinance share of mortgage activity decreased to 64.5% of total applications from 67.5% the previous week.

Now, several weeks of rising rates are dousing what was incredibly high demand for refinancing. That pulled total weekly mortgage application volume down 1.9% last week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.92% from 2.88%, with points increasing to 0.37 from 0.33 (including the origination fee) for loans with a 20% down payment. The rate was 95 basis points higher one year ago.

The average rate on the 15-year fixed rose for the first time in seven weeks, to 2.48%.

With higher rates now offering less potential savings, applications to refinance a home loan fell 5% for the week but were 87% higher than a year ago. That annual comparison had been more than 100% just last week

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