The latest report from Black Knight, Inc. on mortgage originations, called the Originations Market Monitor, has been released. The report encompasses data until the conclusion of March 2023. According to the report, rate lock dollar volumes increased by 43% in March compared to the previous month. The increase in lock volumes was observed across all categories.
The Originations Market Monitor by Black Knight, Inc. offers a detailed and timely perspective on origination activity using the daily rate lock information obtained from the widely utilized pricing engine in mortgage lending, Black Knight Optimal Blue PPE. It is the most extensive and prompt report of its kind in the industry.
Andy Walden, the Vice President of Enterprise Research at Black Knight, stated that the housing market remains highly sensitive to interest rates. He noted that March’s rate lock activity is a prime example of this trend. At the beginning of the month, when rates rose towards 7%, originations experienced significant downward pressure. However, when the banking sector faced uncertainty, and investors shifted towards US Treasuries, rates fell by 0.25 points. Consequently, there was a quick surge in originations, particularly in the purchase market.
In March, the pipeline data indicated a significant increase in rate lock dollar volumes, with an overall rise of 43% compared to February. Purchase locks experienced the most significant increase, rising by 44%, followed by cash-out refinances, which increased by 31%. Even rate/term refis, which had been at historically low levels, saw an increase of 36%. Nevertheless, refinance locks constituted only 13% of the month’s activity, marking a new low for this period, as purchase locks experienced a significantly higher increase.
According to Andy Walden, an increase in rate locks in March is typical before the spring homebuying season, but this year’s surge was more significant than usual. He clarified that the housing market is cooling, with fewer multiple bids and all-cash offers than seen in the recent past. This trend has made sellers more open to FHA offers, which has been further facilitated by the recent decline in FHA mortgage insurance premiums and a mid-month increase in the FHA-to-conforming spread. Consequently, FHA loans accounted for over 20% of the pipeline in March, increasing from 18% at the start of the year and 12% from the previous year.