The application rate for refinances dropped to a series low of 2.4% from 4.5% in 2023, according to the survey research, which was conducted in October. The subdued period for refinance transactions came during a volatile 12-month period for mortgage rates, with the 30-year average fluctuating between 6% and 8%, well above levels earlier in the decade. 

Refinance volume rates still ended up lower in 2024 even as a summer downturn in mortgage rates led to a resurgence in applications in August and September, as interest flagged against a backdrop of elevated volatility in the housing market. 

Borrowers attempting to refinance in 2024's interest rate environment likely had either taken out an initial loan after 2021 or did so out of financial necessity. The rapidly growing rate of rejections could point to affordability strains some homeowners face, particularly as consumer costs accelerated earlier this decade. 

Expected denials led some consumers to not apply for refinancing despite needing it, with a perceived negative response leading that portion of borrowers to grow 2.2% over the year. In October the perceived refinance rejection rate averaged 28.7%.

If borrowing rates were to fall below 6%, though, approximately 4.7 million households would benefit economically from a refinance, ICE Mortgage Technology reported in September. Each further decrease of a quarter percentage point would put more than an additional 1 million in the money, ICE researchers said. 

While 2024 refinance numbers painted a negative picture, rejections on new mortgage applications, likewise, surged in the New York Fed report. The average purchase rejection rate increased by 8.6 percentage points to 20.7% this year, up from 12.1% in 2023. The 2024 rate was more than twice the level of pre-pandemic 2019. 

New borrowers, though, reported less pessimism about a possible "no" response with that particular rate decreasing 0.7% year over year. Overall, purchase applications grew 0.4% in 2024 to 6.1%, but still remains below 2019 activity 

While the share of consumers expecting to apply for a new purchase loan in the coming year pulled back slightly, hopes that interest rates might fall led borrowers to report "higher likelihoods" of applying for refinancing, the New York Fed said. Their average likelihood increased to 5.9% in 2024 from 4.7% in 2023.

Mortgage rejections reflected overall credit application trends measured by the bank, although the increases for most other types of borrowing tended to be smaller.

Along with mortgage purchases and refinances, the survey looked at credit cards and requests for limit increases and auto loans. The average overall credit applicant rejection rate of 21% in 2024 reflected an ongoing rise, heading up 0.9% from 20.1% a year earlier. In 2022, rejections were at 18%. 

The average rejection rate for credit card applications during 2024 was 20.2% and limit increases 38.9%. For auto loans, the number came in at 11.4%.

Increased rejection rates were particularly noticeable for those with credit scores below 680, the New York Fed said.