While movement in purchase and rate/term refinance locks—down 0.8% and up 0.5%, respectively in August—essentially canceled each other out, Black Knight's latest originations report revealed strong growth among cash-out refinance locks, which spiked up 7.6% in August. That drove up the overall rate lock volume by 1.3% month over month.
August's increase in cash-out activity was enough to bring the refinance share of the market above 50% for the first time since February, according to the analysts at Black Knight.
Commenting on the report, Black Knight Secondary Marketing Technologies President Scott Happ pointed out that, after starting the month below 3%, interest rates spent much of August hovering just above that point, with the conforming 30-year at 3.05% at month's end (according to their OBMMI daily interest rate tracker ).
"That sub-3% period seems to have been enough to spur some high-credit-score and high-balance borrowers to refinance, as average credit scores rose along with the non-conforming share of the market."
The cash-out refinance rate, remarks Happ, is hardly surprising, given a recent report  from Black Knight on the extraordinary growth in tappable equity this past quarter—Black Knight Data and Analytics President Ben Graboske called it "by far the strongest growth we've ever seen" adding that it equates to some $173,000 in equity available to the average mortgage holder.
"We've now seen cash-out activity increase for three consecutive months, and with $173,000 in equity available to the average homeowner with a mortgage and home prices still climbing, there is still room in the market for growth. With equity levels at record highs and interest rates broadly expected to tick upward in coming years, cash-out lending is likely to play a much larger part in the overall refinance market."
Black Knight's research points to rising home prices and constrained for-sale inventory as the cause for downward pressure on purchase lending volumes.
Black Knight's full originations report is available on BlackKnightinc.com .