ICE Mortgage Technology’s monthly Originations Insight Report for December 2021 revealed significant changes from the start to the end of the year.
The report generally shows incremental changes that occur month to month, but based on the latest report, the mortgage market evolution from January to December of last year shows sharp changes in some categories.
Refinance originations led the most significant changes, starting with 67 percent of originations in January and ending with 52 percent in December.
This comes as no surprise to market experts, as the number of refinances has continued to sharply decline in recent weeks due to higher mortgage rates.
According to the report, the 30-year fixed mortgage rate averaged 2.88 percent in January and rose to a year-high 3.35 percent by December.
Refinance activity was reflected the most in conventional loan refinancing, which fell from 74 percent to 55 percent throughout the year.
VA refinancing grew to 40 percent, while FHA refinancing started and ended the year at 24 percent.
Conventional loans also were 78 percent of the loans originated in December, after starting the year at 84 percent.
This aligns with the rush for conventional loans while mortgage rates were hitting record lows in January 2021.
As a result of the high number of originations during this period, the number of days lenders required to close a loan began the year at 58 days and ended at 49 days in December.
The number of days to close on refinances fell from 59 to 45 days, while purchase originations improved slightly from 57 to 54 days.
Similarly to the refinance activity trend, while conventional originations fell throughout the year, FHA loans gained 3 percentage points from January.
Adjustable-rate mortgages also grew to 5.2 percent in December, from 2.3 percent at the start of the year.
As rates began to rise, borrowers opted for ARMs more often than at the start of the year when rates were hitting their lowest points.
While the activity may not come as a surprise to many, experts say the report is a solid representation of what occurred throughout the year as the economy started to recover and inflation began influencing rates.
Experts say while these reports are helpful to track where we have been and how borrowers are choosing to react to the influences, consulting with local market experts is the best way to determine personal refinance or purchase decisions.
For example, VA loan activity experienced notable growth throughout the year while FHA experienced both stable activity and slight growth, indicating where the potential may lie for these loan types in the coming year.