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To paraphrase Mark Twain … “Reports of refis’ death have been greatly exaggerated.” According to the latest Origination Insight Report released by Ellie Mae, refinancing activity grew four percent between September and October, accounting for 40 percent of overall mortgage volume—the highest level in six months. Aiding this increase is a faster closing time: The average time to close a refi dropped from 40 days to 39 days, according to the report.
But is the refi going to make a comeback and dominate the industry in the near-term future? In an interview with National Mortgage Professional Magazine, Jonathan Corr, president and chief operating officer at Pleasanton, Calif.-based Ellie Mae, noted that this is not the shape of things to come.
“Refi is taking up more of the volume of total loans,” Corr said. “But interest rates dropped and people are taking advantage of this opportunity.”
Indeed, Ellie Mae’s Origination Insight Report found that the average 30-year interest rate for all loans fell for the sixth consecutive month to 4.371 percent, the lowest average since July 2013. Corr stated that an increase in refi activity can be viewed as a seesaw effect to a decline in rates.
“We will see this little jump in activity if rates go below a certain threshold,” Corr said. “If rates go up, we will see the refi level stay.”
Looking ahead, Corr did not foresee refi returning to its dominant market position.
“The expectation is that rates will slowly drift back up. Not at a rapid pace, but at a pace that is expected. This is a bit of a blip, but I wouldn’t bet on this going forward,” Corr said.