As interest rates skyrocket, mortgage refinancing hits lowest level since Clinton administration

Mortgage applications also continue to decline.

Updated: September 29, 2022 - 1:02pm

The Facts Inside Our Reporter’s Notebook

Mortgage refinancing levels have hit what is roughly their lowest level this century as skyrocketing interest rates cause many homeowners to keep their loans parked at the relatively low rates at which they acquired them. 

"Refinancing" is the financial tool in which a borrower re-structures his loan at rates that are more favorable—lower—than they were at the time he took the loan out. 

The Mortgage Bankers Association reported this week that the interest rate for 30-year fix-rate mortgages—the most popular type of home loan in the country—stands at 6.52 percent, "its highest level since mid-2008."

"With rates now more than double what they were a year ago, the pace of refinancing is running at a 22-year low and last week was more than 80 percent below last year’s level," the MBA said. 

It also noted that "purchase activity was 29 percent lower than a year ago, with higher rates and economic uncertainty weighing on buyers’ decisions.”

The spiking interest rates have come about due to the Federal Reserve's aggressive attempts to tamp down inflation by jacking up rates at high levels over short periods of time. 

Fed Chairman Jerome Powell has warned that the economic effects of those increases could bring about considerable short-term pain for consumers across the country.