[1]
Black Knight, Inc. [2] has announced the release of its latest Originations Market Monitor [3] report, looking at mortgage origination data through March 2023 month-end. New research shows rate lock dollar volumes were up 43% month-over-month in March, as lock volumes increased across the board.
Leveraging daily rate lock data from the Black Knight Optimal Blue PPE [4] – mortgage lending's most widely used pricing engine – the Originations Market Monitor provides the industry's earliest and most comprehensive view of origination activity.
Key Findings:
- Rate lock dollar volumes were up 43% month-over-month in March, driven by seasonal tailwinds, falling interest rates and stronger purchase market performance.
- Lock volumes increased across the board, with purchase locks increasing 44% in the month, well above the 30% average February to March gain seen across the past 5 years.
- Cash-out refinances were up 31% and rate/term locks grew by 36%, but both remain historically low.
- FHA lock volume captured additional market share, accounting for 20% of the March pipeline, up from 18% at the beginning of the year and 12% a year earlier.
- The disproportionate rise in purchase locks pushed refinance volumes to a current cycle low with a 13% share of the pipeline.
- Despite the month-over-month gains, purchase lock counts – which exclude the impact of home price changes – remain well below both last year's (-37%) and pre-pandemic (-12% against March 2019) levels.
- ARM share fell to less than 9% of the month's lending as borrowers took advantage of falling rates and shifted toward fixed-rate products.
- The Optimal Blue Mortgage Market Indices [5] from Black Knight tracked 30-year rates as they climbed to the highest levels of the year in March, reaching 6.8%.
- Uncertainty in the banking sector triggered downward movement in 30-year offerings, which finished March at 6.4%, down 28 basis points from the start of the month.
"This continues to be an incredibly rate-sensitive housing market, and March's rate lock activity perfectly illustrates this dynamic," said Andy Walden, vice president of enterprise research at Black Knight. "Early in the month, when rates started their climb back toward 7% – reaching 6.8% in the process – we saw pronounced downward pressure on originations. In the wake of uncertainty in the banking sector and investors' flight to the safe haven of U.S. Treasuries, rates came down roughly a quarter of a point. The result? Another quick surge in originations, particularly in the purchase market."
The month's pipeline data showed overall rate lock dollar volume up 43% over February, with purchase locks rising 44%, cash-out refinances up 31% and even rate/term refis, which had been hovering near historic lows, up 36%. Despite the rebound, refinance locks fell to just 13% of the month's activity, a new low for this cycle, due to the disproportionate rise in purchase locks.
"It is not unusual for rate locks to surge in March ahead of the spring homebuying season, although this year's rise outpaced what we typically see on a seasonal basis," Walden continued. "A cooling market lacking the multiple bids and all-cash offers of the recent past has made sellers more receptive to FHA offers. That, combined with a recent reduction in FHA mortgage insurance premiums and a mid-month increase in the FHA-to-conforming spread, made FHA loans comparatively more attractive. FHA share increased to more than 20% of the pipeline in March, up from 18% at the beginning of the year and 12% a year ago."
To read the full report, including more data, charts and methodology, click here [6].