Black Night’s newest Originations Market Monitor reports show that month over month in December, overall mortgage rate-lock activity fell by nearly 20%.

Data from Black Knight indicates that the 19.4% decline in rate locks from November to December marks the ninth consecutive decline in origination activity. Over the past five years, the analytics company has tracked data, but this is the biggest drop it has ever recorded. The drop in home buying was fueled by a 20.5% drop in purchase loan locks, with affordability issues and high-interest rates compounding the effect.

As the Fed doubled down on its plan to tighten further in 2023, mortgage rates declined through the first half of December. This is according to the president of Black Knight division Optimal Blue — Kevin McMahon. He further added that during the month, the spread between mortgage rates and the 10-year Treasury yield narrowed to 264 bps or another 22 bps (basis points), up 81 bps for the year, but 40 bps off the recent high.

Currently, cash-out loans and rate-and-term refinances are down 87% and 93%, respectively, due to the unfavorable rate environment. The total number of rate locks in December was only 16% due to refinances.

Overall, rate locks declined by almost 70% annually if we look at the number, rather than the dollar volume, of the locks. Year over year, the number of purchase locks decreased by 47% and was 33% lower than what it was before the pandemic.

As a matter of fact, Black Knight recorded the fewest total locks in December since starting to track in January 2000, as well as the fewest purchase locks in December since early 2014. Dubiously, refinance locks also fell to a record low in December, marking the fourth consecutive month of record lows. Pre-pandemic record low rate lock-ins from July 2000 are more than 50% lower than pre-pandemic numbers.