Refinance volume made up 17% of rate locks in July,
For Aug. 8, the latest date information was available from the product and pricing engine provider, refinancings were 27.5% of lock activity, and that was down 149 basis points from the previous day.
Mortgage rates were already trending down before the jobs report on Aug. 2 sent the market into gyrations. That led
As of Aug. 9, the Optimal Blue website showed the 30-year fixed at 6.5%, which was just the third time the rate was at or below that level since May 15, 2023, the others being Feb. 1 and Aug. 6.
On Aug. 12, the 10-year Treasury yield was at 3.94%, flat with Aug. 9 and almost 6 basis points lower than it was on Aug. 8, but that was up from 3.67% on Aug. 5, the day the markets had the reaction to the jobs report.
Lower rates helped locked activity of
Its Market Volume Index, a measurement of rate lock activity, rose 3.5% from June, with the largest gain in rate and term refinance volume, up 12.3%.
Cash-out refis, which benefited from lenders
Overall activity
"The drop in the Optimal Blue Mortgage Market Indices 30-year conforming rate to 6.67% [for the month] played a significant role in this growth, and we observed the highest level of refinance activity since September 2022," said Brennan O'Connell, director of data solutions at Optimal Blue, in a press release. The average rate for the 30-year fixed in September 2022 was just one basis point higher.
The increase in refi locks comes on the heels of a separate report from ICE Mortgage Technology that put the number of borrowers
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While an increase in refinance activity is good for consumers, the increased prepayment speeds impact both the secondary market and mortgage servicers.
In a report from Bank of America Securities that cites both its own as well as Optimal Blue data, lenders were offering rates of 6.40% for purchase, 6.30% for rate refi and 6.60% for cash-out refi on average as of Aug. 5.
"These rates represent drops of 50, 80 and 55 basis points respectively from early July levels," said the Aug. 9 residential mortgage-backed securities note from BofA Securities analysts Jeana Curro, Chris Flanagan, Ge Chu and Leiyuan (Leslie) Wang. The analysts noted the surge in daily rate lock activity during the week and added that "these volumes could materialize as early as this month, but we think more likely the impact is most visible in September."
BofA revised its prediction of when the Federal Open Market Committee would cut rates. At the Mortgage Bankers Association Secondary and Capital Markets Conference in May,
It now has joined those expecting more and sooner, the report said, stating Fed will now be cutting rates at the September meeting. That is still more conservative than other market observers that out of last week's upheaval are forecasting four-to-five cuts this year, BofA said.
BofA lists several reasons why it expects refi activity to grow in the near term. First off, rate and term refis are "low hanging fruit" for lenders, while industry employment, while having decreased,
Then, recent homebuyers entered the market with a "buy now, refi later" mentality, and now many are getting that eagerly awaited first opportunity.
"Third, the