The mortgage rates rose again last week and borrowers started to consider refinancing. This may seem odd, but despite the increased rates there are still many borrowers that could be benefited from refinances. They might have even been concerned that they would lose their chance.

According to the Mortgage Bankers Association, the average 30-year fixed rate mortgage interest rate with conforming loan balances of $647,200 or less increased to 3.78%, from 3.72%. Points decreased to 0.41, from 0.43, for loans with 20% down payments. This was the highest rate recorded since March 2020. The rate was lower by 86 basis points a year ago.

Seasonally adjusted, mortgage applications for refinance of a home loan rose 18% from week to week due to rising rates. Volume was still half the level of last year. From 55.8%, the week before, refinances accounted for 57.3%.

Although mortgage rates were at an all-time low for much of the last year, not all borrowers could be refinanced. According to Black Knight, an analysis company that provides mortgage technology and data, 5.9 million borrowers still have enough savings to make it worthwhile. The number of borrowers could save as much as 20,000,000 in the future.  

Joel Kan, MBA associate vice president for economic and industry forecasting, stated, “There was likely some volatility in recent application counts due holiday-impacted weeks as well as from borrower trying to secure refinance rates before they go even higher.”

Although mortgage applications to buy a house increased by 4% over the past week, they were only 7% higher than one year ago. This January has seen buyers be uncharacteristically busy. Some are concerned about rising interest rates, which could cause them to lose their homes in the expensive housing market.

According to anecdotally real estate agents, they would be able to sell more homes if there was more inventory. There is a shortage of houses for sale, and the inventory at the lower end is particularly low. This is why the majority of activity now takes place at the upper end.

“Another survey found that the average purchase loan amount was 441,100. Kan stated that the average loan size has risen due to a rapid rise in home prices and a stubbornly low inventories.