Market Data Shows Influx of Recent Refinance Volume
Written By: Joel Palmer, Op-Ed Writer
More data released so far this month has reinforced the trend that mortgage processors and underwriters have been keeping busy lately with home refinance loans.
Optimal Blue, a mortgage analytics provider, reported a surge in refinance volume in its September Mortgage Data Report.
On an absolute basis, refinance production reached the highest level seen since January 2022, according to the report. Rate-and-term refinance lock volume was up nearly 50 percent month-over-month and 700 percent year-over-year. Cash-out refinance volume rose a more modest 6 percent month-over-month but was still up more than 50 percent year over year.
Optimal Blue’s data also showed that refinance loan made up nearly a third of total mortgage loan production in September.
Refinance pull-through rates, which measures the percentage of rate locks that become funded loans, has risen steadily since the spring. Between March and May of this year, the refinance pull through plummeted nearly 20 percent points, from around 65 percent to 45 percent. Since that bottoming out, the pull-through rate has risen each and was 65.4 percent in September.
The average credit score for refinance borrowers is also rebounding since a recent drop. For example, the average credit score for cash-out refinance customers fell from 730 in October 2021 to below 690 a year later. After hovering around 690 most of 2023, the average score is slowly rising, hitting 699 last month.
The average score for rate-term refinances bottomed out just above 710 in February this year. In September the average score was 737.
Fannie Mae data showed a bit of decline from the last week of September to the first week of October, however volume is well above where it was a year ago.
For the week ending October 4, 2024, the dollar volume of refinance applications decreased 14.8 percent week over week, according to its weekly Refinance Application-Level Index (RALI). RALI dollar volume is up 203.5 percent compared to the same week last year. RALI applictation count decreased 10.2 percent week over week and is up 131.1 percent compared to the same week last year.
Last month, Fannie slightly increased its full-year volume projections for 2024 and 2025. Fannie expects 2025 refinance volumes to come in at $649 billion, which would be 73 percent higher than the projected volume for this year.
Technology and data provider Intercontinental Exchange (ICE) Inc. reported in its latest ICE Mortgage Monitor Report that tappable home equity reached a new high of $11.5 trillion in June, more than 9 percent above the same period a year ago. ICE defines tappable equity as money that borrowers can access while still maintaining at least 20 percent equity in their homes.
ICE noted that while overall mortgage debt reached at all-time high of $13.8 trillion in June, the rise in home values rose even sharper. As a result, overall mortgage debt is equal to about 44 percent of overall home values.
Redfin reported last month that the total value of U.S homes reached a record $49.6 trillion, 6.6% higher than a year ago. The total value of U.S. homes has more than doubled in the past decade, climbing nearly 120 percent from $22.7 trillion in June 2014.
The potential for refinancing and home equity lending in the near future is bolstered by a market with approximately 32 million mortgage holders that have at least $100,000 in tappable equity, with 4.6 million holding at least $500,000. In addition, borrowers with credit scores of at least 760 hold two-thirds of tappable equity, according to ICE.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
