Black Knight Mortgage Monitor: Purchase Rate Locks Down 39% From Pre-Pandemic Levels

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Black Knight Mortgage Monitor: Purchase Rate Locks Down 39% From Pre-Pandemic Levels

Sep 15, 2023 | News | 0 comments

Today, Black Knight, Inc.’s Data & Analytics sector, listed as NYSE: BKI, unveiled its Mortgage Monitor Report for August 2023. This report draws insights from the company’s extensive mortgage, real estate, and public records data collection. In this edition, the report delves into the prevalent trend of monthly mortgage payments ranging from $2,000 to $3,000. These payment levels have swiftly become commonplace in the current housing market due to surging interest rates and historically elevated home prices. According to Andy Walden, the Vice President of Enterprise Research at Black Knight, this is a relatively recent development worth noting.

Walden pointed out that the typical principal and interest payment for homebuyers using a 30-year fixed-rate loan reached a record high in July at $2,306, excluding taxes and insurance. He noted that this represents a 60% increase over the past two years. This rise led them to ponder when the $2,000 monthly mortgage payment became the standard. Just two years ago, only 18% of homebuyers were dealing with such payments. By the end of July, this figure had risen to 51%. Additionally, nearly one in four July homebuyers had payments exceeding $3,000, a significant jump from the 5% recorded in 2021. While affordability has been a recurring topic, these statistics underscore the severity of the situation.

Interest rates are not only causing difficulties for potential homebuyers but also impacting how much home equity mortgage holders are willing to access. In total, including first-lien cash-out refinances and second-lien home equity loans and lines, mortgage holders withdrew $39 billion in home equity during the second quarter of 2023. This amount represents a slight increase from the $37 billion seen in the first quarter but is only about half the volume observed in the first quarter of 2022 before interest rates began to rise.

Looking at historical trends, between 2010 and 2021, mortgage holders typically withdrew just under 1% of available equity each quarter. However, in the last three quarters, this percentage has fallen to 0.4%. This decline indicates that the rising interest rates have led to a roughly 55% reduction in equity withdrawals. Essentially, over the past 15 months, nearly $200 billion less equity has been withdrawn and injected into the broader economy than might have occurred under lower interest rate conditions.