Mortgage and Refinance Interest Rates Grow as Purchase and Refinance Rate Spread Widens

💡 The spread between mortgage and refinance interest rates has grown, making it more expensive for homeowners to refinance their existing mortgages.

The spread between mortgage and refinance interest rates has grown, making it more expensive for homeowners to refinance their existing mortgages. This is the largest spread in over a year, as mortgage rates have risen to 5.5% while refinance rates have fallen to 4.8%.

Mortgage Rates Rise to 5.5%

The 30-year fixed mortgage rate has increased by 25 basis points in the past month, making it more expensive for borrowers to purchase a home. This is partly due to the Federal Reserve's hawkish stance on interest rates, which has led to a surge in bond yields. The 10-year Treasury yield has risen to 4.2%, its highest level since January 2023.

Refinance Rates Drop to 4.8%

Despite the rise in mortgage rates, refinance rates have fallen to 4.8%, making it more attractive for homeowners to refinance their existing mortgages. However, the spread between mortgage and refinance rates has grown, making it more expensive for homeowners to refinance. This is partly due to the higher cost of borrowing for mortgage lenders, which has led to a decrease in refinance activity.

Impact on Homebuyers and Refinancers

The widening spread between mortgage and refinance rates will have a significant impact on homebuyers and refinancers. Homebuyers will face higher mortgage payments, while refinancers will face higher costs of refinancing their existing mortgages. This will make it more difficult for homeowners to refinance their mortgages, particularly those with lower credit scores or smaller down payments.

What It Means for Investors