October Refi Share Highest in Four Years

The boom continued in October as more than half of the loans closed during the month were for refinancing. According to Ellie Mae's Origination Insight Report, those loans accounted for 51 percent of the total originated on its system, the highest percentage since March 2015.  The share was 2 percentage points higher than in September.

The average note rate for 30-year fixed rate mortgages closed during the month was 3.94 percent, one basis point higher than the average the previous month. FHA mortgage rates averaged 3.96 and conventional loans averaged 3.98 percent, a 2- basis point decline for the former and 2-basis point increase for the latter.

"Interest rates continued to decline in October which had homeowners reaching out to lenders as they look to save on their monthly mortgage payments," said Jonathan Corr, President and CEO of Ellie Mae. "We are seeing refinances surpass 50 percent of closed loans, which is proof that homeowners are taking advantage of the opportunity to lock in lower rates."

Conventional loans made up 73 percent of all loans originated during the month, up from 71 percent in September while the VA share dropped to 8.0 percent from 9.0 percent.  The FHA share was unchanged at 16 percent. Five percent of loans were adjustable rate mortgages, up from 4.7 percent the prior month.

It took three days longer (42 days) in October to close a refinance loan than in September while a purchase loan took 47 days, a one-day increase. The time for all loans was also up one day to 44.  It took five days longer to close a VA loan (48 days) than a conventional one

The closing rate held at 78.1 percent for all loans.  Closing rates are determined based on applications initiated 90 days earlier, i.e. in July 2019.

Ellie Mae's Origination Insight Report mines data from a sample of approximately 80 percent of all mortgage applications that were initiated on the company's mortgage management system.  Ellie Mae says its report is a strong proxy of the underwriting standards employed by lenders across the country.