Ellie Mae’s latest Origination Insight report shows that the 30-year note rate dropped for the eighth consecutive month as of August, spurring an increase in the percentage of refinances.
In August, the 30-year note rate dropped to 4.07%, falling from 4.18% in July. This decrease attributed to an uptick in refinances, which accounted for 43% of all loans during the month, according to the report.
“The drop in interest rates month-over-month continues to drive up the percentage of refinances, which accounted for 43% of all loans in August, up from 38% the month prior,” Ellie Mae stated. “Purchase percentages as a share of all loans dropped under 60% for the first time in 2019.”
To get a meaningful view of lender pull-through, Ellie Mae said it reviewed a sampling of loan applications initiated 90 days prior to calculate an overall closing rate of 77.3% in August.
According to Ellie Mae, closing rates on purchases increased to 80% during the month, while closing rates for refinances dropped slightly to 72.5%.
However, the percentage of refinances increased across the board last month, with FHA refinances climbing from 24% to 27%.
Conventional refinances rose from 42% in July to 46% in August, and VA Refinances ticked up from 31% in July to 34% in August.
Overall FICO scores increased from last month’s 731 to 734, while LTV decreased to 78 and DTI remained at 24/37, according to the report.
“Interest rates continue to decline and we’re seeing homeowners capitalize on the refinance opportunity throughout the month of August,” said Jonathan Corr, president and CEO of Ellie Mae. “As we enter the fall and the market expects further rate cuts from the Fed, we will watch to see if the share of refinances continues to climb further
NOTE: Ellie Mae’s Origination Insight Report focuses on loans that closed in a specific month, comparing their characteristics to similar loans that closed three and six months earlier. The closing rate is calculated on a 90-day cycle instead of a monthly basis.