Although rejection rates for mortgage refinances dropped in last months of 2016 and beginning of 2017, consumers are also more discouraged about applying, a study from the Federal Reserve Bank of New York showed.
The rejection rate for those who applied for refis dropped from 23.6% in October 2016 to 10.8% in February, according to the Survey of Consumer Expectations Credit Access Survey. During that same period, the application rate fell slightly from 13.6% to 12.4%.
The drop could be due to the rising interest rates, which continue to discourage homeowners from refinancing.
This chart shows the change over time. While rejection rates had been climbing, October through February saw a drop as more applicants were accepted.
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(Source: New York Fed SCE)
The SCE Credit Access Survey queries respondents every four months about their experiences and expectations of applying for and obtaining credit. The SCE is a nationally representative, internet-based survey of a rotating panel of approximately 1,200 household heads. The survey is conducted on our behalf by The Demand Institute, a non-profit organization jointly operated by The Conference Board and Nielsen.
However, for mortgage purchase applications, the rejection rate continued to increase, rising to 13.3%, up from October’s 13% and following a year-long trend of increases. The application rate dipped slightly to 6.8%, down from October’s 7.6%.
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(Source: New York Fed SCE)
But for those that are refinancing, those ages 41 to 59 dropped to the least likely to apply for a refi with an application rate of 10.7%. This is down from having the highest application rate for refis in October at 18.3%.
Baby boomers, on the other hand, increased their market share once again as the application rate among those 60 or older rose to 14.7%, up from 7.7% in October.
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(Source: New York Fed SCE)
Perhaps also due to the rising in refinance applications among the older generation and the drop in younger generations, applications among lower FICO scores dropped significantly. For those with a FICO score 680 or lower, refi applications dropped from 15.5% in October to 7.1% in February.
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(Source: New York Fed SCE)
