Today, Black Knight, Inc. announced the release of its latest Originations Market Monitor report on Monday, looking at mortgage origination data through June month-end. Leveraging daily rate lock data from the Black Knight Optimal Blue PPE – mortgage lending’s most widely used pricing engine – the Originations Market Monitor provides the industry’s earliest and most comprehensive view of origination activity.
“This continues to be a challenging environment for mortgage originators,” said Scott Happ, president of Optimal Blue, a division of Black Knight. “Rate lock activity was down for the third consecutive month in June, with declines seen across all loan purpose types. Purchase mortgages – which currently account for 82% of all lock activity – fell 11% by volume from May and are now down nearly 16% from the same time last year. However, when we look at purchase lock counts to exclude the impact of soaring home values on volume, we see the number of purchase mortgages is off some 21% from last year’s levels.”
The month’s pipeline data showed overall rate locks down 11.1% month-over-month, led by a 13.2% decline in cash-out refinance locks, which are now down 42.2% since last June. Rate/term refinance activity fell another 9.1% from May to mark a 90.4% year-over-year decline. The refi share of the market held at just 18%, the lowest point on record since at least January 2018, when Optimal Blue began tracking the metric. Purchase lock volumes were down 10.8% from May and down 15.6% year-over-year. Government loan products gained market share as FHA and VA lock activity continued to increase at the expense of agency volumes, a trend also likely reflected in another decline in the average loan amount – from $359,000 to $351,000. The overall average credit score in June was 723, with scores on cash-out refinances falling to 693 – the lowest it has been since Optimal Blue began tracking the metric in 2013.
“The month’s data illustrates just how interest rate-dependent the originations market has become,” Happ continued. “With 30-year rates hovering below 6% – still historically low – we’ve seen the rate/term refi market dwindle to next to nothing, with increasing downward pressure on cash-out activity. Purchase volumes are driving 82% of all origination activity and those volumes are on the decline as well – in the heart of the traditional homebuying season. Eventually, equilibrium will return; but, as of June, the market seems to be having trouble adjusting to a rate environment anywhere above the historically low levels reached during the pandemic.”