Rising rates impact projected refinance volumes

CoreLogic estimates refinance volumes in the first half of the year represented about 70 percent of refinances expected for the entire year. The recent increase in long-term mortgage rates also has cut the share of outstanding mortgages with above-market rates by 25 percent.

However, according to the August MarketPulse Report, the company believes the rise in rates is not enough to deeply discourage purchase originations as overall mortgage volumes are projected to improve this year between 12 percent and 22 percent nationwide.

Between May and August, the 30-year fixed rate mortgage rose by a little more than 100 basis points to 4.39 percent, the largest rise in the long-term rate since mid-2004, according to the report.

Prior to the rise in rates, roughly 80 percent of outstanding mortgages had rates higher than the market rate. After the recent increases, only 55 percent of outstanding mortgages had rates higher than the market rate, the report said.

Report projections are based in part on the July 26 Mortgage Bankers Association Weekly Applications Survey, which identified a decrease in refinance applications of 12 percent from the prior month and 59 percent from the past year.