Black Knight Originations Market Monitor: Lock Volumes Fall Despite Marginally Lower Rates as Reluctant Buyers Face Continuing Inventory Shortage
- The Optimal Blue Mortgage Market Indices showed 30-year conforming rates dipping below 6.25% in the first week of April before finishing at 6.45%, for an average of 6.38% for the month, 17 basis points lower than March’s average
- The 10-year Treasury yield ended April at 3.44%, pushing the spread with mortgage rates back above 3%, nearing its high point since the Fed began raising rates last year
- Rate lock volumes fell 22% month over month, with half the change attributable to March having three additional business days; adjusted for these calendar effects, April volumes dropped just 10%
- Month-over-month changes were similar across all loan purposes, with purchase locks down 21.8%, cash-out refinances declining 20.6% and rate/term refis down 27.6%
- The refi share of lock volume dipped below 13% to 12.8%, setting a new floor for refi production
- Conforming loans took share from all other loan products in April, while FHA saw the biggest drop – a rare pullback since FHA began regaining share in late 2021 when it held 10% of total volume
- Purchase lock counts were down 45% year over year; 38% below those in pre-pandemic April 2019
- Average loan amount remained flat at $355K, while the average purchase price rose slightly from $445K to $447K
- Credit quality ticked higher across the board with purchase, cash-outs and rate/term refis all picking up 2 points on average
- ARM share dropped to 7.8% of all lock volume, down from 8.8% in March
JACKSONVILLE, Fla., May 8, 2023 /PRNewswire/ — Today, Black Knight, Inc. (NYSE:BKI) announced the release of its latest Originations Market Monitor report, looking at mortgage origination data through April 2023 month-end. Leveraging daily rate lock data from the Black Knight Optimal Blue PPE, the Originations Market Monitor provides the industry’s earliest and most comprehensive view of origination activity.
“Despite the fact that mortgage rates on average were lower in April, rate lock volumes took a hit,” said Andy Walden, vice president of enterprise research and strategy at Black Knight. “From March to April, volumes were down 22%, even though the average rate in April was 17 basis points lower than that of March. While half the decline can be explained by the fact that there were three fewer business days in April than in March, we clearly saw additional cooling in rate lock volumes this month.”
The month’s pipeline data showed locks down across the board, with purchase locks down 22%, cash-out refinance locks declining 21% and rate/term refinance locks down 28%. Purchase locks accounted for more than 87% of locks in April, the highest share on record. Even so, purchase lock counts were down 45% year over year and 38% below April 2019.
“After seeing purchase rate locks pull to within 15% of pre-pandemic levels in mid-January and again in mid-March on easing rates, we’ve seen that deficit eclipse 30% again in recent weeks,” Walden continued. “The cause is likely multifaceted. In addition to fewer business days in April than in March, another component may be potential homebuyers waiting on the sidelines for more favorable rates before locking. We saw a similar phenomenon on the rate dips in March. Inventory challenges are surely playing a role as well. New listing volumes remain well below pre-pandemic levels and active for-sale inventory fell for the sixth consecutive month on a seasonally adjusted basis. Lock volumes will be worth watching closely in coming weeks to see if this trend continues.”
Each month’s Originations Market Monitor provides high-level origination metrics for the U.S. and the top 20 metropolitan statistical areas by share of total origination volume. Much more detail on April’s origination activity can be found in the full Black Knight Originations Market Monitor report.
About Black Knight
Black Knight, Inc. (NYSE:BKI) is an award-winning software, data and analytics company that drives innovation in the mortgage lending and servicing and real estate industries, as well as the capital and secondary markets. Businesses leverage our robust, integrated solutions across the entire homeownership life cycle to help retain existing customers, gain new customers, mitigate risk and operate more effectively.
Our clients rely on our proven, comprehensive, scalable products and our unwavering commitment to delivering superior client support to achieve their strategic goals and better serving their customers. For more information on Black Knight, please visit www.blackknightinc.com/.
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