In the months of September and October, the mortgage refinance market experienced a notable uptick, with over 300,000 transactions finalized—the highest levels seen in more than two years.
This surge is primarily attributed to a drop in 30-year conforming mortgage rates, which settled into the low-6% range.
These trends were detailed in the Mortgage Monitor report published in December 2024 by Intercontinental Exchange (ICE).
Surge in Refinances
Andy Walden, who serves as the vice president of research and analysis at ICE, explained that the decrease in interest rates during August and September spurred many homeowners to explore refinancing options.
During this period, refinances surpassed the 300,000 mark, a milestone unseen in over two and a half years.
Remarkably, nearly half of all refinances were completed by homeowners who secured more favorable interest rates.
October represented a significant turning point, as it marked the first time in three years that rate-and-term refinances outpaced cash-out refinances.
Efficiency in Closing Times
The data from ICE also demonstrated that tech-savvy lenders were ready to meet this surge in refinancing demands.
As a result, October saw the shortest average closing times across all loan categories in five years.
This efficiency coincided with improved retention rates among servicers; in Q3 of 2024, servicer retention hit a two-and-a-half-year high, with 28% of homeowners choosing to refinance with their existing servicer.
Walden emphasized the importance of this refinancing wave, pointing out that many homeowners were eager to adjust their newly acquired mortgages.
A considerable portion of the recent rate-and-term lending—about 78%—consisted of refinances from loans taken out in 2023 and 2024.
By tapping into these opportunities, homeowners successfully reduced their first lien rates by more than one percentage point, leading to an average monthly savings of $320.
In total, this translated to approximately $47 million in savings for homeowners over just two months.
Delinquency and Foreclosure Rates
Interestingly, the average duration of previous mortgages for those engaging in rate-and-term refinancing was remarkably short, at just 15 months—the lowest average seen in nearly two decades.
Over two-thirds of these borrowers managed to lower their rates by more than one full percentage point, with nearly a third achieving reductions of 1.5 percentage points or more.
Breaking it down further, the average reductions for rate-and-term refinances in September and October stood at over one percentage point, specifically -1.07 and -1.17 percentage points, respectively.
This translated to monthly payment reductions of $310 in September and $320 in October.
Borrowers with VA loans witnessed the most substantial improvements, averaging a 1.28 percentage point reduction in October.
Notably, VA loans accounted for around 30% of the rate-and-term refinancing activity during these months—a figure significantly higher than their overall share of active mortgages.
However, it’s crucial to recognize that these VA loans may carry higher risks.
Data revealed that over 35% of VA rate-and-term refinances conducted in 2024 had loan-to-value ratios exceeding 100%.
In a broader context, ICE’s analysis indicated a slight decline in the national delinquency rate, which fell to 3.45% in October—reflecting a decrease of 0.8% from September, although up by 6% compared to the previous year.
Despite a 12.2% increase in foreclosure starts in October, the rate remained down by 12.3% year over year.
Additionally, more than 40,000 first-lien mortgages were estimated to have entered delinquency across six states, mainly due to the fallout from hurricanes Helene and Milton.
Source: Housingwire