Mortgage refinance volume surged in September and October, as borrowers took advantage of rates in the low 6% range, ICE Mortgage Technology’s Mortgage Monitor report shows.
During that two-month period, more than 300,000 mortgage refinances closed, the most in 2.5 years, according to the report.
Nearly 150,000 of those were rate/term refinances, with October marking the first time in three years that rate/term volumes outpaced those of cash-out refis.
Almost all were borrowers who took out mortgages one to two years ago, when the average rate for a 30-year was closer to 7%.
“Homeowners pounced on their incentive to refinance as rates fell through August and September,” says Andy Walden, vice president of research and analysis for ICE, in a statement. “More than 300,000 mortgage holders closed on refinance transactions in September and October, the most we’ve seen in two-and-a-half years. What’s more, almost half of that activity involved the homeowner refinancing into a better rate, with October marking the first time in three years that there were more rate/term than cash-out refinances in a given month.”
ICE notes that technology helped many lenders meet the increased demand, with average closing times among all loan types – purchase as well as cash-out and rate/term refinances – all hitting their lowest October levels in the five years ICE has been tracking the metric.
By the same token, technology is translating into higher retention rates for mortgage servicers, as well, with servicers retaining more than a third of customers refinancing to improve their rate or term, the best in two and a half years.
As has been the case in recent years, retention was strongest – nearing 40% – among those who’d recently taken out their mortgages, the firm says in its report.
“This brief, but welcome, spike in refinancing was dominated by homeowners quickly ditching their recently acquired mortgages,” Walden says. “Refinances out of 2023 and 2024 vintages drove an impressive 78 percent of recent rate/term lending and nearly half of refi activity overall.
“The average rate/term refinancer had been in their prior mortgage for just 15 months, the shortest average length of time in the nearly 20 years we’ve been tracking that metric,” he adds. “For most, this was a no brainer; on average, these folks cut their first lien rates by more than a point and their monthly mortgage payment by $320 per month. That works out to roughly $47 in monthly payment savings locked in by homeowners in just September and October alone.”
Photo: Bikram Sharma