Refinance lending continued to bounce back in a big way in July, with rate locks up 5.5% month over month, according to the latest Mortgage Monitor report from Black Knight.

July’s surge built even further upon June’s refi activity gain, with falling 10-year Treasury yields, the repeal of the adverse market refinance fee, and ongoing uncertainty regarding the surging Delta variant all helping push rates back below 3%.

“The market’s uncertainty around rising Delta variant caseloads across the U.S. has helped push yields on the 10-year Treasury down to their lowest level since February,” said Black Knight Secondary Marketing Technologies President Scott Happ. “This has, in turn, put downward pressure on mortgage interest rates, with our OBMMI daily interest rate tracker showing July’s month-end conforming 30-year at 2.99%, 17 basis points lower than the month prior.”

Both rate/term and cash-out refi locks saw substantial monthly jumps, up 24% and 20% respectively. The swell of movement pushed refinance market share back up to 50% for the first time in five months, while locks on purchase loans saw a decease, dropping 7% from June.

With rates remaining low, Happ said that the summer growth in refi lending could extend at least one more month.

“While we didn’t see homeowners looking to refinance react as quickly or as strongly to such slight rate movements in the past few months, they certainly did so in July,” he said. “The mid-month surge was pronounced, but short-lived, suggesting that crossing the 3% threshold was what borrowers were waiting for before acting, and when rates ticked back above that psychological line, they held back on the sidelines once again. Now that rates are again below 3%, a very early look at August lock data suggests more of the same in the month’s earliest days.”