Is the Refi Market Now Dead?

Mortgage bankers have been living off of refinancings the past six months with applications for the loans running at about 70% of all new business. This, of course, is not a sustainable business strategy for the industry and every mortgage banker in the nation knows it. But with the yield on the benchmark 10-year Treasury now solidly over the 3.5% line, fear is starting to set in. One mortgage banker in Southern California had this to say late last night: "Four — count them, four rate changes to the worse today. Refinances are dead for now. We had $45 million [in loans] floating. Bye bye." He added that production in the new year will be devastated if rates stay above 5%." Then again, rates can fall as quickly as they rose, but right now it doesn't feel that way.