diff --git a/compose/config/types.py b/compose/config/types.py
index 2bb2519d1..2e648e5a9 100644
--- a/compose/config/types.py
+++ b/compose/config/types.py
@@ -166,6 +166,4 @@ class VolumeSpec(namedtuple('_VolumeSpec', 'external internal mode')):
 
     @property
     def is_named_volume(self):
-        return self.external and not (
-            self.external.startswith('.') or self.external.startswith('/')
-        )
+        return self.external and not self.external.startswith(('.', '/', '~'))
diff --git a/compose/project.py b/compose/project.py
index bbc61a5bb..8e763abf6 100644
--- a/compose/project.py
+++ b/compose/project.py
@@ -477,7 +477,8 @@ def get_networks(service_dict, network_definitions):
 
 
 def match_named_volumes(service_dict, project_volumes):
-    for volume_spec in service_dict.get('volumes', []):
+    service_volumes = service_dict.get('volumes', [])
+    for volume_spec in service_volumes:
         if volume_spec.is_named_volume:
             declared_volume = next(
                 (v for v in project_volumes if v.name == volume_spec.external),
@@ -490,7 +491,9 @@ def match_named_volumes(service_dict, project_volumes):
                         volume_spec.repr(), service_dict.get('name')
                     )
                 )
-            volume_spec._replace(external=declared_volume.full_name)
+            service_volumes[service_volumes.index(volume_spec)] = (
+                volume_spec._replace(external=declared_volume.full_name)
+            )
 
 
 def get_volumes_from(project, service_dict):
diff --git a/tests/integration/project_test.py b/tests/integration/project_test.py
index aa0dd33f0..586f9444c 100644
--- a/tests/integration/project_test.py
+++ b/tests/integration/project_test.py
@@ -846,6 +846,7 @@ class ProjectTest(DockerClientTestCase):
         self.assertEqual(len(volumes), 1)
         self.assertEqual(volumes[0].external, full_vol_name)
         project.up()
-        engine_volumes = self.client.volumes()
-        self.assertIsNone(next(v for v in engine_volumes if v['Name'] == vol_name))
-        self.assertIsNotNone(next(v for v in engine_volumes if v['Name'] == full_vol_name))
+        engine_volumes = self.client.volumes()['Volumes']
+        container = service.get_container()
+        assert [mount['Name'] for mount in container.get('Mounts')] == [full_vol_name]
+        assert next((v for v in engine_volumes if v['Name'] == vol_name), None) is None