As homeowners refinance into some of the lowest mortgage rates on record, mortgage repayment rates climbed to their highest levels since 2005, National Mortgage News reported Oct. 3.
Using data from analytics firm Lender Processing Services, National Mortgage News reported that the rate at which home loans were repaid in August could alleviate 25 percent of the nation’s overall mortgage debt in one year.
LPS’s prepayment data factored in borrower defaults as well as debt retired in home sales, which increased in August to a two-year high as the housing market showed signs of recovery.
“There should be a lot of opportunity for people to refinance,” Herb Blecher, senior vice president at LPS Applied Analytics, told National Mortgage News. “The interest rate environment is favorable even for folks who refinanced recently to get a new loan.”
Rates for a typical 30-year fixed-rate mortgage have dropped significantly from last year’s high of 5.05 percent, which has prompted an influx of repeat refinancing. Prepayment speeds in August climbed 23 percent and most of the increase involved loans made in 2011, LPS data showed, according to National Mortgage News.
Prepayments on loans to underwater borrowers who owe at least 20 percent more than their property’s value have risen 65 percent through August, the fastest on record.