Refinancing activity jumped eight percentage points in January to comprise about 51% of loan volume flowing through Ellie Mae's origination platform, the mortgage software firm reports.
It was the highest level of refinancing volume in more than a year and a half, according to the firm's Origination Insight Report.
In December, refinances accounted for about 43% of all volume.
Meanwhile, the closing rate for all loans rose for the fourth consecutive month to 62.4%, the highest level since Ellie Mae began tracking this data in 2011. In December it was 60.2%.
Driving the increase in refinance volume is the fact that mortgage interest rates remained low throughout the month. The average interest rate for a 30-year fixed-rate mortgage fell from 4.251% to 4.154% in January. Rates were at their lowest level since July 2013, according to Ellie Mae's data.
However, some reports, including Freddie Mac's Primary Mortgage Market Survey, show that interest rates are back on the rise, which could, in turn, drive down refinance volume in February.
‘Homeowners who missed refinancing over the past year because they did not have enough equity in their homes are getting a second chance in 2015,’ says Jonathan Corr, president and CEO of Ellie Mae. ‘Lower rates and the decision by the Federal Housing Administration to lower the mortgage insurance premium (MIP) are also good news for the purchase market.’
Despite the increase in refinance volume, the average closing time for refinances fell from 42 days to 39 days.
The average FICO score for all closed loans was 731 in January, up from 728 in December.
The report is based on data derived from Ellie Mae's Encompass origination platform.
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