Mortgage prepayments, a gauge of refinancing volume and housing market demand, rose to a six-year high in October, according to Black Knight.
The prepayment rate was 1.81%, the highest reading since May 2013, Black Knight said on Monday. That was up 16% from September and more than double compared with October 2018.
Low mortgage rates are spurring people to refinance or to buy new homes, which typically means they pay off their old loans. The average U.S. rate for a 30-year fixed mortgage was 3.69% in October, compared with 4.83% a year earlier, according to Freddie Mac data.
“Prepays are now up 134% year-over-year as refinancing homeowners continue to take advantage of low interest rates,” Black Knight said in a statement.
Existing home sales rose 1.9% in October to a seasonally adjusted annualized rate of 5.46 million, the National Association of Realtors said on Thursday. This put sales 4.6% above October 2018’s rate.
Mortgage originations probably will exceed $2 trillion this year for the first time since 2016, according to a Fannie Mae forecast. Lenders likely will fund $2.06 trillion, the mortgage financier said. The refinancing share probably will be 37%, Fannie Mae said.
The Black Knight report also showed the national delinquency rate, measuring overdue mortgage payments, fell to 3.39% in October, three basis points from the record low set in May.
Measured at the state level, the lowest delinquency rates were in Colorado, at 1.73%, followed by Washington, at 1.81%, and Oregon, 1.86%, the report said.
The states with the highest delinquency rates were: Mississippi at 10%, Louisiana, at 7.72%, and Alabama, at 6.68%.
The five states with the biggest deterioration in their non-current rate were: Iowa, Arkansas, Oklahoma, Indiana and Arizona, the Black Knight report said.
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