Map Shows States Where Most Americans Are Refinancing Their Homes

South Dakota, Montana, Nebraska led the nation in the first quarter of 2024 in the share of mortgage applications that were for refinancing of homes, according to data made available to Newsweek by the Mortgage Bankers Association (MBA).

Half of mortgage applications in South Dakota at the beginning of 2024 were from homeowners who looked to change the terms of their loans. Nebraska reported that 44.5 percent were for refinanced mortgages, while Nebraska had 42 percent, MBA data showed.

On the other side of the equation, New York recorded about 23.2 percent of its mortgages for refinanced, the lowest share in the country. Other states that had a relatively low percentage included West Virginia at 24.3 percent and Illinois at 27 percent.

One explanation might be that at the start of the year, mortgage rates, which had in the fall of 2023 soared its highest level since the start of the century of about 8 percent, dropped to the mid-6 percent range.

The mortgage market is deeply rate sensitive. This week's data on mortgage applications from MBA illustrates how even the slightest movement in borrowing costs can affect how the housing market operates.

For the week ending June 7, the 30-year fixed rate ticked down by 0.05 percent to 7.02 percent, sparking a huge jump in mortgage applications of nearly 20 percent from the previous week. The increase was helped substantially by the refinance component of the market, which rose by 28 percent and contributed a 35.2 percent share of mortgage loan applications for the week, according to MBA.

"Lower rates earlier in the week meant a strong increase in refinance activity, particularly for [Veterans Affairs] borrowers, who jumped on the chance to lower their rates. Overall refinance activity was more than 27 percent above one year ago," Mike Fratantoni, MBA's chief economist, said on Wednesday.

The question is whether this dynamic will continue. Recent economic data is signaling that policymakers may begin slashing borrowing costs at some point this year.

The average 30-year fixed rate came in at under 7 percent as of June 13 on the back of softening inflation data. Elevated inflation pushed the U.S. central bank beginning in March 2022 to hike rates to their highest level in two decades. If inflation continue to slow, policymakers likely will cut interest rates, which in turn will lead to cheaper mortgage costs.

Should that happen, the market could see a wave of new refinancing activity from homeowners.

Watch For Falling Rates signage is seen at a mortgage lender's office in Lake Oswego, Oregon, on October 29, 2020. Mortgage rates have dipped leading to refinancing activity in the housing market. Stock Photo/Hapabapa via Getty Images

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