The rise in rates may have made it uneconomical for about 4.5 million homeowners with $600 billion in loans at a rate of 7 percent to refinance, according to Fannie Mae and Freddie Mac data. That may limit an expected boost to consumer spending, which accounts for two-thirds of the economy, by crimping extra spending cash for homeowners.
The Mortgage Bankers Association of America's refinancing index, which measured such applications, fell for the first time in three weeks. It is still at its fourth-highest weekly level.
So far, bankers said consumers have reacted to the rise by jumping to lock in rates before the refinancing opportunity fades.
"There are still mobs of people that are in the money and can benefit" from refinancing, said Culver.
ABN Amro has seen a "surge in activity" as rates have risen. The bank has been working at full capacity, handling about 69,000 applications per month, Rhodes said.
A drop in refinancing "probably won't have a huge effect, but it will be negative and it will damp the outlook somewhat," said Michael Moran, chief economist at Daiwa Securities America in New York.
The Mortgage Bankers Association estimates the refinancing wave has generated about $45 billion in consumer spending. There are more than $1 trillion in loans with rates still low enough to refinance.
J.P. Morgan Chase's mortgage unit got $7 billion in mortgage applications in October and is on pace for the same levels in November, said Eric Gotsch, a senior vice president at J.P. Morgan Chase Bank. That compares with $1.3 billion in December last year, he said.
Mortgage rates are still close to their 30-year lows, he said. "The window has not shut yet."
