ARM prepayment rates soar to highest level since 2007.

Black Knight, Jacksonville, Fla., said lower interest rates and the spring home buying seasons have led to overall prepayment activity more than doubling over the past four months to the highest level seen since late 2016. The company's monthly Mortgage Monitor report said borrowers with 2018 vintage loans are now driving more than twice as much prepayment volume as any other vintage after jumping by more than 300% over the past four months. Black Knight estimated closed refinance loans rose by more than 30% in May from April, with refinance volumes estimated to be three times higher than the 10-year low reached in November. Black Knight estimated lower rates have resulted in 1.5 million potential refinance candidates in the 2018 vintage alone, matching the total of potential refinance candidates in the 2013-2017 vintages combined. The report said 8.2 million homeowners could now both benefit from and likely qualify for a refinance, including more than 35% of those who took out their loans just last year. Black Knight Data & Analytics President Ben Graboske said ARM prepayment rates have now jumped to their highest level since 2007 as borrowers have sought to shed the uncertainty of their adjustable-rate products for the security of a low, fixed interest rate. 

Source: The Mortgage Bankers Association