The refinance share of mortgage activity increased to 48% of all mortgages in February, up from 46% in January and up from 34% in February 2019, according to Ellie Mae’s Origination Insight Report.
Driving the increase in refinance share was lower mortgage rates: The average rate for a 30-year, fixed-rate mortgage in February was 3.86%, down from 3.96% the previous month.
Because refinances generally take less time to process than purchase loans, the average time to close fell to 43 days, down from 48 days in January.
The average time to close a purchase loan was 45 days, down from 48 days, while the average time to close a refinance was 40 days, also down from 48 days.
The adjustable-rate mortgage (ARM) share of activity fell to 5.3%, down from 6.3% in January and down from 7.6% in February 2019.
The closing rate for all loans was 78.3%, up slightly from 78.2% in January and up from 75.5% in February 2019.
The average FICO score for all closed loans was 738, flat compared with the previous month but up significantly from 726 in February 2019.
“Interest rates continued to decline into February which we believe is causing us to see a small refinance rebound,” says Jonathan Corr, president and CEO of Ellie Mae, in a statement. “We will wait to see what the impacts of global factors, like stock market declines and the coronavirus, have on the housing market as we enter the spring. We continue to see our lenders consistently lowering their time to close and closing more loans as they leverage digital mortgage technology across more aspects of the loan origination workflow.”