Refinances are flowing again, according to July mortgage lending numbers in a Black Knight report, and early August data suggests more are on the way.

For the first time since February, refinancing activity accounted for half of all origination activity, according to a report by Black Knight. Interest and forward refinancing increased by 24%, while disbursement refinancing increased by 20% compared to the previous month. Overall, mortgage locks rose 5.5% month on month.

A number of changes that have worked together recently drove the growth in refinancing activity.

In mid-July, the Federal Housing Finance Agency withdrew the adverse market fee that had increased most refinanced mortgages by 50 basis points. The removal was one of the first political moves by the agency's new assistant director, Sandra Thompson. Industry stakeholders had argued that the fee was meant to help build the capital of government-sponsored companies while the GSEs performed well during the pandemic. Fannie Mae posted net income of $ 7.2 billion in the second quarter of 2021.

Interest rates have also fallen well below 3%, due to the ongoing decline in 10-year government bond yields, despite having spent little time above 3% this year. Borrowers reacted strongly to the decline in refinancing, said Scott Happ, president of secondary marketing technologies at Black Knight.

"The mid-month increase was strong, but short-lived, suggesting that borrowers waited to cross the 3% threshold before acting. said Happ. "Now that rates are back below 3%, a very early look at the August blackout dates suggests more of that in the first few days of the month."

Mortgage rates fell 2.77% this week on fears about the emerging Delta variant. And while it's harder to quantify, these concerns can also contribute to refinancing for homeowners looking to cut their payments to cushion economic uncertainty.

Refinancing credit scores also rose for the first time this year, showing that higher credit borrowers are acting quickly to take advantage of favorable market conditions.

Meanwhile, purchase credit locks were down 7% from June. The shopping market continues to struggle with rising home prices and severely limited inventories.

Home prices rose across the board in May, rising 16.6% annually, marking a full year of rising prices, according to the latest S&P CoreLogic Case-Shiller National Home Price Index Report.

source https://seapointrealtors.com/2021/08/09/refinances-make-a-comeback-in-july/

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