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Refinances are being cited as the major reason for last week's five percent drop in mortgage application volume. Refinances were nearly 19 percent lower than at the same time last year.
Since the beginning of 2018, interest rates have been rising, only to drop for the first time last week, per CNBC. Editor Diana Olick reports that current borrowers "are so used to record-low rates that any move higher takes away the benefit from a refinance." She adds that the share of refinances in all mortgage applications dropped to the lowest level since September 2008, at 38.5 percent.
While the bond markets already expect the Fed's move, the announcement is one of only four per year when members update their outlook. "This has become the market's way to stay up to speed on a general rate hike outlook," said Matthew Graham, chief operating officer at Mortgage News Daily. "The catch is that there's no way to know how much of a change the market currently expects. The takeaway is that rates stand a higher chance to experience a bigger move, for better or worse."
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