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Announcing its latest monthly Originations Market Monitor data release covering September 2022, Black Knight, Inc, found that due to rates finishing the month at 6.72%—the highest level in 15 years—rate lock volumes are down 10% from August and 60% year-over-year.
Additionally, refinance activity has continued its recent descent, accounting for 16% of the month’s lock volume, with three-quarters of that number being cash-out refinances.
Cash-out locks fell as well, dropping 26.2% from August and 78% from a year prior.
However, rate/term locks, which went over a ledge earlier this year appeared to hit a floor now registering 93.3% below numbers from September of last year.
“Interest rate and affordability challenges have fundamentally changed the mortgage origination market for the remainder of 2022—and the foreseeable future,” said Scott Happ, President of , a division of Black Knight. “Interest rates are now at their highest level in 15 years, while affordability is at 37-year lows. Given these realities, it’s not particularly surprising that rate locks are falling sharply. Keep in mind, however, that all this is coinciding with the already traditionally slower purchasing months.”
According to their findings, overall rate lock dollar volume is down 9.9% over August, which means it is at its lowest level since December 2019.
This aligns with Black Knight data that shows roughly 90% of all active first-lien mortgages have current rates below 5%, putting the population of rate/term refinance candidates at an all-time low,” Black Knight said. “As a result, the refi share of the market hit a new low of 16% in September.”
“Interest rates jumped almost a full percentage point in September, with affordability headwinds already high,” Happ continued. “Home prices are pulling back in a growing number of markets, but across the country, affordability remains a challenge. This is likely one reason why non-conforming loans gained market share and we saw an increase of the average loan amount.”
“The decline in purchase lock volumes bears this out as well. Purchase lock counts – which exclude the impact of soaring home values on dollar volume – show we’re down more than 10% from 2019 levels, marking the third consecutive month that the number of purchase locks has fallen below pre-pandemic norms.”
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