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47 January 2025 J O U R N A L January 2025 » ly mortgage debt. Banks and thrifts had an increase of $4.7 billion (0.8%), while life insurance firms saw a gain of $10.0 billion (4.3%). The biggest percentage rise in mul- tifamily mortgage loan holdings was 4.3% for life insurance businesses. The biggest drop in multifamily mortgage loan holdings was 6.8% for private pension funds. REPORT: WHAT'S DRIVING THE RECENT REFI 'BOOM?' B ased on the extensive mort- gage, real estate, and public records data sets that the company possesses, Intercontinen- tal Exchange, Inc. has published its December 2024 ICE Mortgage Monitor Report. In August and September of this year, the mortgage industry saw a welcome surge in refinance activity as 30-year conforming mortgage interest rates dropped into the low 6% level. To understand what that brief "boomlet" in borrowing activity tells us about U.S. mortgage holders and their intentions in the current market, this month's Mortgage Monitor delves deeply into ICE Mortgage Trends closed loan data. When the rate equation shifted in their favor, homeowners with loans that were generated during the last few years acted quickly, as explained by Andy Walden, ICE VP of Research and Analysis. "Homeowners pounced on their incentive to refinance as rates fell through August and September," Walden said. "More than 300,000 mortgage holders closed on refinance transactions in September and October, the most we've seen in two-and-a-half years. What's more, almost half of that activity involved the homeowner refi- nancing into a better rate, with October marking the first time in three years that there were more rate/term than cash-out refinances in a given month." Key Finding From the December 2024 Mortgage Monitor Borrowers took advantage of inter- est rates in the low 6% range, resulting in the closing of over 300,000 mortgage refinances in September and October, the largest in 2.5 years. Approximately 150,000 of those were rate/term refinances, and in Oc- tober, for the first time in three years, rate/term volumes exceeded cash-out refinance volumes. In September and October, the typical rate/term borrower reduced their first lien rate by over one point and their monthly payment by $320, resulting in a total monthly savings of $47 million in those two months alone. More than 30% of rate/term activity was made up of mortgage holders refi- nancing out of and back into Veterans Administration (VA) loans, which rep- resented more than four times the VA market share of all active mortgages. This year, loan-to-value ratios over 100% were used to originate over 35% of VA and over 10% of all rate/term refi- nances, raising the possibility of future performance risk. Measuring Purchase, Cash-Out, and Rate/Term Refinance Activity With average closing times for all loan types—purchase, cash-out, and rate/term refinances—hitting their lowest October levels in the five years ICE has been tracking the statistic, ICE Market Trends data also demonstrated that technologically savvy lenders were prepared to satisfy that demand. This is also translating into stronger retention rates, with servicers keep- ing more than a third of clients who refinance to increase their rate or term—the best in two and a half years, according to ICE McDash +NextLoan data, which records loans before and after a refinance or other prepayment. Retention was highest among individ- uals who had recently taken out their "Every major capital source for commercial mortgage debt increased its holdings of mortgages during the third quarter of 2024." —Jamie Woodwell, Head of Commercial Real Estate Research, MBA