Mortgage prepayments increased to a three-year high in August due to the refinancing boomlet that was driven by lower rates, according to Black Knight’s First Look report.
The monthly prepayment rate was 1.5%, an increase of 5.45% compared with July and an increase of 61.77% compared with August 2018.
The firm notes that the prepayment rate could continue to rise, given that loans originated in August will likely close in September, due to the 30 to 45 day closing window.
In fact, “the peak in refinance-driven prepayments is likely still to come,” Black Knight says in the report.
Meanwhile, the U.S. mortgage delinquency rate – which had edged up slightly the previous month – decreased slightly, falling just 0.15% compared with July and down 1.49% compared with August 2018.
As of the end of the month there were about 1.8 million properties in delinquency (30 days or more past due, but not in foreclosure).
There were about 36,200 foreclosure starts in August, a decrease of 7.65% compared with the previous month and down about 23.14% compared with a year earlier.
The total U.S. foreclosure inventory rate was 0.48%, down 2.42% compared with July and down 11.46% compared with August 2018.
As of the end of the month there were about 253,000 homes in the foreclosure inventory, down about 5,000 compared with the previous month and down about 28,000 compared with a year earlier.