Low mortgage rates drive November’s frenzied originations activity

November's refinance share of mortgage activity ascended for the fourth straight month as interest rates fell a full percent lower from the year before.

With the average 30-year FRM dropping to 2.97% for the month, refinances accounted for 61% of closed loans, up annually from 49% and 60% in October, according to Ellie Mae's Origination Insights Report. Despite losing ground in origination share, purchases also had a strong month as sales spiked 19.7% annually, according to a separate report from Remax.

"As we near the conclusion of 2020, we are still seeing a robust appetite for refinances, accounting for the lion's share of closed loans in the month," Joe Tyrrell, president of ICE Mortgage Technology, said in a press release. "Interest rates continue to fall below 3%, driving demand for both purchases and refinances as homebuyers stretch their spending potential or take advantage of the opportunity to reduce their monthly mortgage payment."

This week, the 30-year fixed-rate mortgage rate declined to the lowest low yet —2.67%.

The overall closing rate crept down again in November, going down to 75.6% from the report's high of 78.6% year-over-year and 76.7% month-over-month. Among users of Ellie Mae's loan origination system, the time to close increased to 55 days from 54 days in October. Purchase origination closing times inched up to 49 days from 48 days monthly and refinances went to 59 days from 57 days.

The share of adjustable-rate mortgages held at 2.4% from October but cut down from 5.3% the year prior. Average FICO scores for loans closed reversed course from prior months and dipped to 752 from October's 753 while still overshadowing the year-ago rate of 736.

"With many parts of the country entering the next phase of pandemic-related shutdowns, lenders will need to take advantage of technology to enable virtual capabilities for their employees and homebuyers and provide automated workflows to simplify processes and improve engagement with interested parties," Tyrrell said.