Ellie Mae’s June Origination Insight Report revealed that the 30-year note rate dropped for the sixth-consecutive month to 4.40%, which is down from 4.52% in May.
The 30-year note rate for FHA loans fell from 4.63% the month prior to 4.49% in June. Rates for conventional loans declined to 4.41% from May’s 4.52% and VA loans saw rates fall to 4.20% from May’s rate of 4.31%.
Closing rates hit historic highs in June, according to Ellie Mae, as the average closing rate on all loans for June was 76.8%—an increase from 75.6% in May. Closing rates on purchase loans was 78.8% and closing rates for refinancing was 73.4%.
“As the 30-year note rate continues to decline, we are seeing robust purchase and refinance activity,” said Jonathan Corr, President and CEO of Ellie Mae. “Closing rates have hit the highest percentage since we began tracking data in 2011 and even with heavy summer activity, Ellie Mae’s customers are still seeing their times to close loans remain well below the industry average.”
Ellie Mae also states that the percentage of refinances for the month decreased to 31%. Purchases accounted for 69% of total closed loans. The amount of Adjustable Rate Mortgages decreased to 6.3%, which is a slight decrease from May’s 6.7%.
Low mortgage rates could mean big savings for homeowners who decide to refinance. A report by CNBC earlier this month that the average borrower could save about $266 per month because of the low mortgage rates, which could bring potential savings to about $2.2 trillion.
Those eligible for refinancing increased by 6.3 million since last November when rates were more than 5%. CNBC stated that about 1.5 million borrowers, or roughly 35% of those who took out loans last year, could benefit from lower mortgage rates and refinancing. Mortgage applications to refinance rose 92% last week, and refinances for loans originated last year increased 300%.
“While we’ve observed increases across nearly every investor type, product type, credit score bucket and vintage, some changes stand out,” said Ben Graboske, President of Black Knight Data & Analytics. “For instance, prepayments among fixed-rate loans have hewed close to the overall market average, rising by more than two times over the past four months. However, ARM [adjustable-rate mortgage] prepayment rates have now jumped to their highest level since 2007 as borrowers have sought to shed the uncertainty of their adjustable-rate products for the security of a low, fixed interest rate over the long haul.”