As Rates Decrease, Refinances Tick Up

According to the July Origination Insight Report from Ellie Mae, the 30-year note rate dropped for the seventh straight month to 4.18 percent, down from 4.40 percent in June. The dramatic drop in interest rates month-over-month has led to a significant increase in refinances. In July, refinances accounted for 38 percent of all loans, up from 31 percent the month prior. Purchase percentages dropped to 62 percent of all loans, down from 69 percent in June.  


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Closing rates also continued to rise to a new high with the closing rate on all loans at 77.0 percent, up from 76.8 percent in June. Closing rates on purchases increased to 79.3 percent in July, up from 78.8 percent in June, while closing rates on refinances dropped slightly to 72.9 percent in July, down from 73.4 percent the month prior.


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Other statistics of note in July included:

  • The time to close all loans held steady at 42 days in July. The time to close a refinance loan increased to 40 days, up from 38 the month prior, while the time to close a purchase loan dropped from 45 days in June to 43 days in July. 
  • The percentage of Adjustable Rate Mortgages (ARMs) decreased to 5.7 percent, down from 6.3 percent in June.
  • Average FICO scores held at 731 for the second consecutive month.

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“Shrewd homeowners are locking in lower interest rates which has driven the spike in refinance activity in July,” said Jonathan Corr, president and CEO of Ellie Mae. “And with the Federal Reserve cutting rates further, we expect to see continued activity as homebuyers are able to stretch their dollar and enter the market.”


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The Origination Insight Report mines data from a robust sampling of approximately 80 percent of all mortgage applications that were initiated on the Encompass all-in-one mortgage management solution. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.