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59 August 2024 J O U R N A L Mortgage Origination & Refi Activity: 2022-2024 Approximately four million first lien mortgages originated since 2022 had 30-year rates above 6.5%, with 1.9 million having rates of 7% or above, according to the research. In the 7–7.225 percen- tile range, there are, on average, about 240,000 active mortgages; nevertheless, there is a discernible peak of 690,000 loans with rates just below 7%. "The concentration of active loans just below 7% has more to do with bor- rower psychology than concrete savings," Walden said. "There's clearly some- thing appealing in today's market for a homeowner to see a 6-handle in front of their mortgage rate. From a rate/term refinance lending perspective, this group is worth watching as they represent a po- tential tipping point for a return to more meaningful, albeit historically modest, refi volumes." Refi volumes are still far below his- torical levels for the time being. Having said that, there have been some notice- able changes in the refinancing land- scape of late. Take the recent increase in the VA market share, which, according to ICE origination statistics, went from less than 10% of rate/term refis a year ago to more than 30% in recent weeks. The rise in VA refinance share seems to be due, in large part, to streamline refinances. A before-and-after analysis of ICE McDash +Property data shows that some veterans, particularly those who had taken out mortgages within the previous year, took advantage of the streamlined refinancing program to low- er their interest rate by more than a full percentage point, for an average monthly savings of $230 among April originations. HIGHLIGHTING LOAN ACTIVITY ON 30-YEAR FIXED RATE MORTGAGES T he average rate offered on these loans is far lower than that of their FHA and conforming mortgage counterparts, and the ICE U.S. VA 30-year fixed rate mortgage index is down over a full percentage point from its peak in late October. With the reten- tion of FHA and VA refinances tripling from 15% in Q4 to 46% in Q1, VA refi- nances also contributed to the servicing retention rate in Q1 reaching its best level in 18 months. However, the average borrower had to pay more for their loan balance in order to fund closing fees and/or buy down their rate, so those reduced pay- ments came at a price. In addition to the rapid turnaround, the exceptionally high prepay speeds have the potential to harm investors in assets secured by VA loans. The recent VA loan activity confirms the results of the recently published 2024 ICE Borrower Insights Survey, which indicated that, with a 20-point difference between the lowest mortgage rate and the next most popular choice, obtaining the lowest mortgage rate was the most important factor when selecting a lender. However, borrowers usually don't weigh many possibilities even though they desire the lowest rate. Actually, when choosing a loan, some 84% of borrowers questioned looked at either one (36%) or two (48%) options. This demonstrates how crucial it is for lenders to remain aware of their consum- ers' needs and initiate contact as soon as a favorable refinancing opportunity pres- ents itself, as does the effective proactive retention of FHA/VA borrowers in Q1.