Optimal Blue: Rate-and-Term Refis Jump in May

(Image courtesy of Optimal Blue)

Optimal Blue, Plano, Texas, released its Market Advantage Mortgage Data Report for May, finding, among other metrics, an almost 26% increase in rate-and-term refinances in May.

This comes amid a dip in interest rates–the benchmark Optimal Blue Mortgage Market Indices 30-year conforming rate ended the month at 7.02%. That’s down 22 basis points from the end of April.

Total rate lock volume rose 5.3% from April and 1.8% year-over-year. There was a 4.1% increase month-over-month in purchase lock volume and a 7.2% rise in cash-out refinances, in addition to the large jump in rate-and-term refinances.

However, purchase lock counts were down 4% year-over-year.

Eighty-seven percent of total volume was purchases, and 13% was refinances.

“The sharp increase in demand for rate-and-term refinances following a dip in rates indicates that homeowners with rates above 7% feel pinched and are sensitive to even modest interest rate movements in the current economic landscape,” said Brennan O’Connell, Director of Data Solutions at Optimal Blue. “For context, since Optimal Blue began tracking the 30-year conforming rate as a market index in January 2017, interest rates only exceeded 7.02% on 120 market days. Based on other measures, buyers who locked loans on those days have the highest mortgage rates of the past two decades.”

The average credit scores for borrowers remained high, averaging 738.

From April to May, the average loan amount was flat at about $374,500. But, the average home purchase price rose increased over that period to $480,300 from $477,900.

The Market Advantage Mortgage Data Report was previously known as the Optimal Blue Originations Market Monitor.