Last year, 37% of mortgage-origination volume was because of refinancings, according to industry research group Inside Mortgage Finance.
What’s more, there are fewer homeowners eligible to refinance because of rising rates.
The number of borrowers who could benefit from a refinancing is down about 37% from the end of last year, estimates Black Knight Inc., a mortgage-data and technology firm.
Still, rising interest rates, a shortage of housing inventory and higher home prices are all long-term threats to purchase activity.
Increased mortgage rates can hamper refinancing activity because many homeowners have rates that are already lower than what lenders can now offer.
Recently, Mr. Haverly, 33 years old, looked into refinancing a rental home he owns, but rising rates dissuaded him.
Since around the beginning of 2017, Valley National Bancorp, based in Wayne, N.J., has transitioned its mortgage business to 40% refinancing from 90%, said Kevin Chittenden, who runs residential lending.
The bank previously relied largely on attracting homeowners through its ads for low-cost refinancings, but has since engaged with outside sales reps who are focused on purchases.
Guy Cecala, chief executive of Inside Mortgage Finance, said he expects some smaller nonbank lenders to sell themselves by the end of the year because of the drop in the refinancing market and mortgage originations overall.
Quicken Loans Inc. got about 70% of its mortgage-origination volume last year from refinancings, according to Inside Mortgage Finance—a higher proportion than any other large lender.