Rate-and-term refinances jumped 109% in August compared with July as mortgage rates decreased, according to Optimal Blue’s Market Advantage mortgage data report.
Refi locks reached highest market share since the Fed began hiking rates in March 2022.
Total rate lock volume increased 1% despite the typical seasonal slowdown in purchase lending.
Lock volume growth was driven by the surge in refinance activity, as homeowners reacted to declining mortgage rates.
“Refinance activity, particularly rate-and-term refinances, surged as mortgage rates declined across all loan types,” says Brennan O’Connell, director of data solutions at Optimal Blue, in a statement. “Notably, August saw a remarkable 109 percent month-over-month increase in rate-and-term refi volume in response to a 31-basis-point drop in the benchmark OBMMI 30-year conforming rate, which ended the month at 6.37 percent. Rate-and-term refi activity was up 300 percent from the same period last year.”
Refinances now account for 26% of total production, the highest level since March 2022, when the Federal Reserve began increasing interest rates, as per the report.
Cash-out refinances saw a modest increase of 8%, month-over-month.
Purchase volume fell by 10%, compared with July.
Mortgage rates trended downward in August across all loan types, with the biggest shift in FHA rates, which fell by 40 bps to 6.13%, and the smallest shift occurring in conforming rates, which fell by 31 bps to 6.37%.
The 10-Year Treasury yield decreased by 18 bps to 3.91%, with the spread between the 10-Year Treasury and the 30-year conforming mortgage rate narrowing by 13 bps to 246 bps.
This marks a significant improvement in the spread, which has fallen by over 50 bps from the same period last year.
Photo: Breno Assis