Black Knight Originations Market Monitor: Cash-Outs Plunge in September; Purchase Locks Decline on Higher Rates, Record-Low Affordability

Rhea-AI Summary

Black Knight, Inc. (NYSE: BKI) reported a significant decline in mortgage origination activity in September 2022, driven by rising interest rates and affordability challenges. The 30-year mortgage rate surged to 6.72%, the highest in over 15 years. Overall lock volumes fell nearly 10% from August and 60% year-over-year, with refinances plummeting to just 16% of the month’s lock volume. Cash-out refinances dropped 26.2% from August and 78% from September 2021. Purchase lending volumes decreased by 7.6% from August and 29.4% from last year, indicating a challenging market landscape.

Positive

• Non-conforming loans gained market share.
• Average loan amounts increased.

Negative

• 30-year mortgage rates rose to 6.72%, highest in 15 years.
• Overall lock volumes down 10% from August and 60% year-over-year.
• Refinances declined to 16% of monthly lock volume.
• Cash-out refinance locks dropped 26.2% from August and 78% from last year.
• Purchase lending volumes fell 7.6% from August and 29.4% year-over-year.
• Pipeline data recorded the lowest dollar volume since December 2019.

• Black Knight's Optimal Blue Mortgage Market Indices tracked 30-year rates as they rose 91 basis points overall in September to finish the month at 6.72%, the highest level in more than 15 years
  
  
• Overall lock volumes were down nearly 10% from August, 30% down in the last three months and almost 60% off last year's levels
  
  
• Refinances continued their decline, accounting for just 16% of the month's lock volume, with cash-outs making up almost three-quarters of all refinance activity
  
  
• However, cash-out locks – which had shown some resilience even as interest rates began to rise – dropped significantly as well, falling 26.2% from August, and are now down 78% from last year
  
  
• Rate/term locks – which had been falling precipitously in recent months – appeared to hit a floor, holding steady (-0.1%); 93.3% below the same month in the previous year
  
  
• This aligns with Black Knight data that shows roughly 90% of all active first-lien mortgages have rates below 5%, with the population of refinance candidates at an all-time low
  
  
• Purchase lending – while making up the vast majority of September activity – fell as well, with volumes down 7.6% from August and 29.4% from last year
  
  
• Using purchase lock counts – as opposed to dollar volume – to exclude the impact of record-breaking home price growth, the number of loans locked remains 10.2% below 2019's pre-pandemic level

JACKSONVILLE, Fla., Oct. 10, 2022 /PRNewswire/ -- Today, Black Knight, Inc. (NYSE: BKI) announced the release of its latest Originations Market Monitor report, looking at mortgage origination data through September month-end. Leveraging daily rate lock data from the Black Knight Optimal Blue PPE – mortgage lending's most widely used pricing engine – the Originations Market Monitor provides the industry's earliest and most comprehensive view of origination activity.

"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 Optimal Blue, 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."

The month's pipeline data showed overall rate lock dollar volume down 9.9% month over month and at the lowest level since December 2019. The decline was broad-based but largely driven by a 26.2% decline in cash-out refinance locks. With tappable equity near all-time highs, cash-outs had shown some early resilience even as rates began to rise. They're now down 78.2% from September 2021. In contrast, rate/term refinance activity appeared to have found a floor, holding steady at -0.1% from August, down 93.3% year over year. 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. 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."

Each month's Originations Market Monitor provides high-level origination metrics for the U.S. and the top 20 metropolitan statistical areas by share of total origination volume. Much more detail on September's origination activity can be found in the full Black Knight Originations Market Monitor report.

About Black Knight

Black Knight, Inc. (NYSE: BKI) is an award-winning software, data and analytics company that drives innovation in the mortgage lending and servicing and real estate industries, as well as the capital and secondary markets. Businesses leverage our robust, integrated solutions across the entire homeownership life cycle to help retain existing customers, gain new customers, mitigate risk and operate more effectively.

Our clients rely on our proven, comprehensive, scalable products and our unwavering commitment to delivering superior client support to achieve their strategic goals and better serving their customers. For more information on Black Knight, please visit www.blackknightinc.com/.

For more information:
Michelle Kersch	Mitch Cohen
904.854.5043	704.890.8158
michelle.kersch@bkfs.com	mitch.cohen@bkfs.com

 

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SOURCE Black Knight, Inc.

FAQ

What did Black Knight report about mortgage rates in September 2022?

Black Knight reported that 30-year mortgage rates rose to 6.72% in September 2022, the highest level in over 15 years.

How much did lock volumes decline in September 2022?

Overall lock volumes decreased by nearly 10% from August and almost 60% compared to last year.

What percentage of lock volume was accounted for by refinances in September 2022?

Refinances made up only 16% of the month's lock volume.

What trends were observed in cash-out refinance activity for September 2022?

Cash-out locks dropped 26.2% from August and were down 78% from September 2021.

What was the status of purchase lending volumes in September 2022?

Purchase lending volumes fell by 7.6% from August and 29.4% from the previous year.