ICE: September, October See Refinance Surge
(Image courtesy of ICE; Source: ICE McDash +NextLoan. Breakout image courtesy of Mohamed hamdi/pexels.com)
Intercontinental Exchange Inc., Atlanta, released its Mortgage Monitor, finding that more than 300,000 refinances closed in September and October–the most in 2.5 years.
About 150,000 were rate/term refinances. October was the first time in 3 years that rate/term refinance volumes outplaced cash-out refinances.
“This brief, but welcome, spike in refinancing was dominated by homeowners quickly ditching their recently acquired mortgages,” Andy Walden, ICE Vice President of Research and Analysis, said. “Refinances out of 2023 and 2024 vintages drove an impressive 78% 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. 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 $47M in monthly payment savings locked in by homeowners in just September and October alone.”
More than two-thirds of all rate/term refinances were able to drop rates by more than a full percentage point, and nearly a third improved their rate by 1.5 percentage points or more.
“As you’d expect,” Walden continued, “the interest rate threshold at which a given homeowner would be enticed to pull the trigger on a refi varied by loan size. Nearly half of refinancing borrowers with balances between $250K and $375K needed a 125 basis point reduction before deciding to refi. The distribution of rate savings for those with balances between $375K and $624K were largely similar. Once a borrower’s balance got above $750K, however, it was clear that less rate incentive was required for a refinance to be of value. Nearly 40% of those borrowers cut their first lien 75 basis points or less by refinancing, and about 12% saw benefit in doing so even with less than a 50 basis points reduction.”
The activity surrounding VA loans accounted for more than 30% of rate/term activity, more than four times the VA market share among all active mortgages.
More than 35% of the VA rate/term refinances in 2024 have been originated with loan-to-value ratios of more than 100%.
For refinances generally, more than 10% were originated with LTV ratios over 10%.
