Mortgage prepayments more than doubled in September from a year earlier as low rates spurred people to refinance their home loans.
The volume of homes loans that were paid off – usually due to refinancing or a home sale – rose 121% from September 2018, according to Black Knight.
“Prepayment activity rose by 3% from August despite facing headwinds from the typical seasonal decline in home sale-related prepayments,” the report issued on Thursday said. “Falling rates continue to spur refinance activity,” Black Knight said.
The average U.S. rate for a 30-year fixed mortgage was 3.61% in September after falling every month of the year, according to Freddie Mac data. It was the lowest monthly reading since April 2016, the data showed.
Fannie Mae last week boosted its forecast for U.S. mortgage originations in 2019 past $2 trillion, saying 2019 probably will be the best year since 2016. Lenders likely will originate $2.04 trillion in home loans this year, Fannie Mae said. The new estimate is just a few billion dollars shy of the $2.05 trillion lent in 2016.
The new Fannie Mae forecast boosted the refinancing share to 37% from the 35% it projected last month. The mortgage giant began the year, in its January forecast, predicting a 26% refinancing share.
The Black Knight report also showed the national delinquency rate, measuring overdue mortgage payments, edged up in September to 3.53%, led by loans in Mississippi, Louisiana, Alabama, West Virginia and Arkansas.
Even with a small increase from the prior month, which the report described as a normal seasonal trend, the delinquency rate was 11.2% below September 2018.