Mortgage rate locks were up 5.5% month-over-month overall in July, as interest rates dipped back below 3%, according to the Black Knight Originations Market Monitor.
Significant growth was seen in both rate/term (+24%) and cash-out (+20%) refinance locks, though purchase volumes declined 7% in the face of continued constraints on for-sale inventory, the company said.
“The market’s uncertainty around rising Delta variant caseloads across the U.S. has helped push yields on the 10-year Treasury down to their lowest level since February,” said Black Knight Secondary Marketing Technologies President Scott Happ. “This has, in turn, put downward pressure on mortgage interest rates, with our OBMMI daily interest rate tracker showing July’s month-end conforming 30-year at 2.99%, 17 basis points lower than the month prior.”
Refinance volumes were undoubtedly boosted by the mid-month announced repeal of the Adverse Market Fee on GSE finances as well as rate declines due to falling 10-year Treasury yields, Black Knight researchers added. This increase in refinance activity has brought the market mix back to an even 50-50 refinance/purchase split for the first time in five months.
“When the FHFA announced the repeal of its adverse market fee for refinances in mid-July on top of already falling 10-year Treasuries, we saw interest rates tick down below 3% within days,” Happ continued. “And while we didn’t see homeowners looking to refinance react as quickly or as strongly to such slight rate movements in the past few months, they certainly did so in July.”