October saw strong refinancing spree
It’s no secret that refinancing has surged in recent months. But according to new data, it’s actually making up more than half of all closed mortgage loans — marking the highest level for refinancing in more than four years.
Four-year high for refinancing
The latest Origination Insight Report from mortgage technology provider Ellie Mae shows that refinancing has hit a four-year high. According to the data, refinances accounted for 51 percent of all closed loans in October — the highest share of refis since early 2015.
Refis were most popular with conventional borrowers. A whopping 58 percent of all conventional loans in October were refinances.
Jonathan Corr, president and CEO at Ellie Mae, said low mortgage rates were the motivator, pushing homeowners to contact their lenders and save on their monthly payments.
The month of October averaged a 3.69 percent interest rate for 30-year, fixed-rate loans. That was down more than a full percentage point from a year earlier, when rates averaged 4.83 percent.
As a result of the increasing demand for refinancing, the time to close on these loans jumped for the month. It took an average of 42 days to close a refinance loan in October — up from 39 days in September. Purchase loans took 49 days.
Adjustable-rate loans see a jump
Adjustable-rate mortgages also increased for the month of October. They accounted for 5 percent of all closed loans last month.
According to Freddie Mac, 5/1 ARMs averaged a 3.39 percent rate last week — down 70 basis points from a year ago and nearing their two-year low of 3.31 percent.
Despite the downslide, the ARM share of closed loans is well below the numbers seen last year. In October 2018, adjustable-rate loans made up 8.2 percent of all mortgage closings.
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