Magazine article American Banker

Rate Surge May Put Kibosh on the Refinancing Boom

Magazine article American Banker

Rate Surge May Put Kibosh on the Refinancing Boom

Article excerpt

Rate Surge May Put Kibosh On the Refinancing Boom

The mortgage refinancing boom of 1991 may be coming to an end, the victim of a sharp rise in interest rates.

Rates on 30-year fixed-rate mortgages have jumpled more than 30 basis points in the past two weeks, to about 9.88%. Signs of a strengthening economy have pushed up yields on long-term bonds, and mortage rates have followed suit.

The rise, according to some analysts and executives, is reducing the appetite of borrowers to swap out of adjustable-rate loans into fixed-rate models. As fixed-rate mortgages dipped below 9.5% earlier this year, such refinancings accounted for a large portion of all mortgage refinancings.

"I would be willing to bet that the refinance boom is dead for now," said Gary Gordon, a thrift analyst with Paine Webber Inc.

ARCS Mortgage Corp., the mortgage-banking unit of Bank of New York, has seen refinancings drop to 35% of all applications from 60% a month ago, said Howard Levine, president. …

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