Mortgage refinancing activity in the United States has slowed, attributed to the rising interest rates in the mortgage market.
Applications to refinance existing mortgages into loans with lower rates have declined for four straight weeks and are now at the lowest level since June this year, according to the latest survey conducted by the Mortgage Bankers Association (MBA).
Though interest rates are still below the 2009 level, they have been continuously climbing with a sell-off in the 10-year Treasury note, which came despite an announcement last month from the Federal Reserve that it would purchase US$600 billion worth of long-term Treasuries to boost the economy.
According to mortgage analyst HSH Associates, average 30-year fixed-rate home loans hit 4.7 percent, up from 4.33 percent in October.
Mahesh Swaminathan, an analyst at Credit Suisse, estimates that the decline in refinancing activity could eliminate US$1 billion to US$2 billion in annual savings for borrowers.
“If refinancing activity slows down a lot, that would be a negative for the economy,” said Mr. Swaminathan.