The share of refinances accounted for 51% of all closed loans in the loans—the highest percentage of refinances since March 2015—according to Ellie Mae’s October Origination Insight Report.
Purchases accounted for 49% of total closed loans, which is a 2% decline from the prior month. This occurred during the same time mortgage rates rose, as the 30-year mortgage rate increased to 3.94% for all closed loans—up from 3.93% in September.
“Interest rates continued to decline in October which had homeowners reaching out to lenders as they look to save on their monthly mortgage payments,” said Jonathan Corr, President and CEO of Ellie Mae. “We are seeing refinances surpass 50% of closed loans, which is proof that homeowners are taking advantage of the opportunity to lock in lower rates.”
The 30-year mortgage rate for FHA loans fell from 3.96% to 3.94% while the rate for conventional loans rose from 3.96% to 3.98%.
Time to close all loans rose slightly to 44 days in October from 43 days in September. Closing refinances rose to 42 days from 39 the month prior. The time to close purchases increased one day to 47.
The percentage of Adjustable Rate Mortgage on all loans increased to 5%, which is slightly higher than the 4.7% the prior month. Closing rates on all loans was unchanged at 768.1% for the second consecutive month.
The share of refinances has been growing for the past year, as the number of refinances has grown from 35% six months ago and 32% a year ago.
Refinances accounted for 33% of all loans closed by millennials in September—the largest share of refinance activity since Ellie Mae began tracking data in 2016.
Ellie Mae also reported that it is millennials who are cashing in on refinances, as the share of refis among millennials rose 8% month-over-month in September.
“Throughout 2019, we’ve seen millennials refinancing in order to take advantage of low-interest rates and in September about one out of every three loans closed by this demographic was a home-refinance, the highest share we’ve seen since we launched the Millennial Tracker in January 2016,” said Joe Tyrrell, COO at Ellie Mae. “Lenders have done a great job educating millennials on recognizing refinance opportunities, and as a result, this demographic has been able to lock in historically low rates. Going forward, we’ll be keeping a close eye on how these rates impact millennials looking to make a home purchase as well.”