Black Knight, Inc [1]. announced the release of its latest Originations Market Monitor report [2], analyzing mortgage origination data through February. Leveraging daily rate lock data from Black Knight's Optimal Blue PPE [3], the Originations Market Monitor provides the industry's earliest and most comprehensive view of origination activity.
"As we noted back in November, the Federal Reserve's unwinding of its bond buying program has been having a stronger impact on mortgage rates than Treasury yields," said Scott Happ, President, Optimal Blue, a division of Black Knight. "Driven by Fed policy and exacerbated by global instability, we've seen the spread between 30-year conforming rates and 10-year Treasury yields climb more than 40 basis points in just three months, topping 2.25% in February. Our OBMMI daily interest rate tracker showed the average 30-year conforming rate top 4% in February for the first time in more than two years, closing out the month at 4.09%."
The month's pipeline data showed rate locks falling 5.4% from January, driven in part by declines in both cash-out and rate/term refinance locks, which saw month-over-month drops of 15.3% and 34.1%, respectively. Rate/term refinance lending activity was down for the fifth consecutive month, falling to the lowest level in three years–now more than 80% off 2021 levels.
Cash-out locks, which have been buffered from rising rates by soaring home values, registered a 6.3% year-over-year decline in February. Nonconforming loan products continued to gain market share at the expense of agency volumes as the pace of home price growth has reaccelerated. Pull-through rates–the share of locks that result in funded loans–fell on both purchase and refinance locks, with refi pull-through falling to just 68.6%.
"While refinance activity took a hit in February due to sharp rises in conforming rates, purchase lending rose again on strong homebuyer demand," said Happ. "The 7.2% month-over-month increase in purchase locks pushed February purchase volumes up 5.6% from the same time last year. The average home loan amount continues to climb in the face of rising home prices and tightening affordability. Indeed, February's $6,500 jump pushed that average to just under $354,000. In turn, nonconforming products – including both jumbos and loans with expanded guidelines – accounted for a full 17% of the month's lock activity."
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. More detail on January's origination activity can be found in the full Black Knight Originations Market Monitor report here [2].