Refinance home Mortgage interest RatesFunding of home ownership Mortgage rates
Isn' it good bye to repis for a while? Ellie Mae's new survey shows that 75% of all mortgage purchases are now nearing their lowest point, with refi's floating around historical troughs. As Ellie Mae's latest Origination Insight Review shows, 71% of all credit taken out in July was purchased while only 29% was refinanced.
This is the second consecutive months in which refi was so low (and buys so high). These numbers also reflect the smallest percentages of refies ( or the highest percentages of shopping, as viewed ) since Ellie Mae began to track these dates in 2011. In other words, in seven years refi was not as small as a percent of the total inventions.
Ellie Maes reported that in January already, when mortgage rates were in the lower 4% band, refinancing accounted for 45% of all new investments. The refinancing rates have fallen since then, as interest rates have increased, as fewer borrower have the incentives to refinance. Ellie Maes reported that Refris fell from 45% in January to 43% in February, to 38% in March, to 34% in April, to 30% in May and to 29% in both June and July.
During the same horizon, interest rates increased by more than 50 base points. A most dramatic decline was seen in traditional lending, where the proportion of refinancing declined from 51% in January to 31% in July. The proportion of FHA loan refinancing declined from 28% in January to only 19% in July.
Since the beginning of the year, the proportion of Refi's VA credit business has fallen from 34% to 25%. Don't look for the reversal trend," said Jonathan Corr, Ellie Mae Chairman and Chief Executive Officer. Some good headlines about the refinancing front in this week's Mortgage Bankers Association's Weekly Mortgage Applications Survey showed that the refinancing rate of mortgage applications rose from 36 last weekend.
However, this can only be an increase on the radars, as interest rates are likely to rise further this year. While today's interest rates are still low by historical comparison, they are still higher than many younger house owners have seen in their adulthood. These borrowers are not going to convert their 3rd 95% mortgage into a 4th refin.
75 percent right now, and they certainly won't do it if rates keep rising no matter how much their home is currently worth. It' s a good idea to keep your house open.