Black Knight, Inc. has announced the release of its latest Originations Market Monitor report, looking at mortgage origination data through October month-end. Leveraging daily rate lock data from Black Knight’s 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.
“With interest rates now at their highest level in 20 years, the refi market is rapidly approaching a bottom,” said Scott Happ, president of Optimal Blue, a division of Black Knight. “Indeed, our most recent Mortgage Monitor report showed that the number of borrowers with rate incentive to refinance has hit an all-time low of around 130K, and the vast majority of those are at least 14 years into a 30-year mortgage, with little incentive to restart the clock.”
The month’s pipeline data showed overall rate lock dollar volume down 14.3% month over month and at the lowest level since February 2019. The decline was broad-based but driven by a 25.1% decline in cash-out refinance locks. With tappable equity near all-time highs earlier in the year, cash-outs had shown some early resilience even as rates began to rise. They’re now down 83.6% from October 2021. Rate/term refinance activity fell an additional 15.7% after holding steady in September and is down 92.6% year over year. All in all, refinance locks made up just 14% of the month’s activity.
Purchase lending faced continued downward pressure from affordability constraints, with rising rates offsetting recent pullbacks in home prices. By dollar volume, such locks were down 13% from September and 39% from October 2021. When looking specifically at the number of purchase locks to exclude the impact of record home price growth over the last several years, we see it was down 37% year over year and 26% compared to pre-pandemic levels in 2019.
“Affordability remains the overarching concern in the mortgage origination market right now,” Happ continued. “Despite home prices continuing to pull back in a growing number of markets across the country, the current rate environment means affordability remains a thorny challenge. It’s therefore not very surprising to see a resurgence of somewhat lower-rate loan products like ARMs. Affordability, rates and home values all factor into falling purchase prices and loan sizes and all are generating headwinds over and above the normal seasonal downturn.”
