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Early casualty of rising rates? Mortgage refinancing.

Data: Federal Reserve Bank of New York; Chart: Axios Visuals

The recent surge in mortgage rates has snuffed out last year’s massive refinancing boom.

Why it matters: It shows the Fed’s effort to lift interest rates — which began as a verbal campaign last fall and proceeded to actual rate hikes this year — is already starting to bite.

Driving the news: The New York Fed’s quarterly report on consumer debt and credit showed a sharp drop in mortgage refinancing activity. Originations of refi loans fell 15%, to $424 billion, in the first quarter.

Refi loan originations are down 40% from the first quarter of 2021. The boom peaked in Q2 of last year, when conventional 30-year fixed mortgage rates hovered around 3%. As rates have risen, they’ve left fewer people with an incentive to refinance. (Today they’re around 5.25%.)

How it works: Mortgage refinancing is a key way the Fed can use interest rates to create economic activity.

Refinancing typically lowers your monthly payment, putting more spending money in your pocket that will work its way into the economy.

The bottom line: The Fed is tapping the brakes, and the slowdown is coming.