As mortgage rates recently hit their highest point in seven years, closed refinances fell back to their low-point of 2018, according to Ellie Mae.
The refinance share of closed loans dropped to 29% from 38% year-over-year, and down from August’s share of 32%. As mortgage rates climbed in the past month, fewer borrowers took the opportunity to refinance, instead holding onto the likely lower rates of their current mortgage.
“We see refinances remain at a low percentage of aggregate closed loans and purchase inventory continues to be tight as we move into the fall,” Jonathan Corr, president and CEO of Ellie Mae, said in a press release.
“We did see the first reduction in interest rates this month and with that, the percentage of ARMs began to increase. However, we believe that the seasonal decline in home buying and continued affordability constraints will shape the purchase market.”
Closing rates for all loans stayed static at 71.1%, the highest percentage of 2018. That rate is down from 71.6% year-over-year.
The share of closed purchase mortgages went back up to 71%, the highest share recorded by Ellie Mae since it started tracking it in 2011. It’s up year-over-year from 62% and up from 68% in August, according to the latest Origination Insight report.
Last year’s purchase share peak was 68% in June, a figure either met or exceeded five times in 2018.
January is inclined to have seasonally weak purchase shares and has had the lowest percentages since the start of 2017 — 55% this year and 53% last year.
The adjustable-rate mortgage share, which tends to rise along with mortgage interest rates, jumped to 7.2% from the 6.6% it sat at for two consecutive months. ARMs represented 5.5% of all closed loans in September 2017.