Refinance dollar volume plummet as incentives vanish

“Since the beginning of August, mortgage rates have increased almost 200 basis points, driving down the share of outstanding loans with incentive to refi,” said Fannie Mae chief economist Doug Duncan. “The overall level of refinancing activity is down 57% over the past two months and down 77% since the beginning of the year.”

The refi dollar volume was 91.2% lower than during the refinance boom in the third quarter of 2020. Compared to the “refi slowdown” in the fourth quarter of 2018, refinance applications were down by 39%.

The Mortgage Bankers Association projected that economic headwinds and the housing market crunch in 2023 will drive a 3% drop in purchase originations and a 24% plunge in refinance volume.