The Fed’s recent rate cut drove a 50% month-over-month increase in rate-and-term refinance activity in September, according to OptimalBlue’s Market Advantage data report.
What’s more, rate-and-term refinance volume spiked 700% compared with September 2023.
OptimalBlue notes that while the Federal Open Market Committee (FOMC) lowered its target federal funds rate by 50 bps on Sept. 18, the market had already priced in a portion of the rate reduction, leading to a full month of increased refinance activity in September.
The cut drove overall refinance volumes to their highest since early 2022, the firm says.
“Refinance production has been trending higher for a few months now as mortgage rates rallied, but purchase activity had been stubbornly stagnant,” says Brennan O’Connell, director of data solutions at Optimal Blue, in a statement. “However, September volumes indicate the tide may be turning. Excluding April of this year, which was impacted by the timing of Easter, September marks the first month with a year-over-year (YoY) increase in purchase locks since the Fed began raising rates in Spring of 2022.”
“As we move into the fourth quarter, this is a very encouraging sign that the market may have found a floor and production is on the upswing.”
Photo: Pepi Stojanovski