Black Knight Originations Market Monitor: Loan Demand Dips and Borrowers Shift Toward Jumbos, ARMs as Rate Rise Resumes
- Rate lock dollar volumes rose
2% month over month in February, although the number of locks dropped, as loan production shifted toward jumbos, which offered more favorable rates than GSE products - Purchase lock volumes rose
4% , driven by seasonal tailwinds, while cash-out refinance volumes fell11% on rising interest rates and rate/term locks remained near record lows - The refinance share of the market fell back to
14% of overall activity, the low point in this cycle first reached in October - Despite the month-over-month gains, purchase lock counts – which exclude the impact of home price changes – are well below both last year's (-
42% ) and pre-pandemic (-35% against 2020) levels - Nonconforming loans – including jumbos and expanded guidelines – picked up share relative to all other loan products (
12.2% ), while conforming (56.6% ), FHA (18.4% ) and VA (12.0% ) products all lost share - Likewise, the ARM share of lending popped back above
10% in February as the rise in rates pushed borrowers to consider alternatives to fixed-rate loans - Optimal Blue Mortgage Market Indices from Black Knight showed 30-year rates dipped below
6% for the first time since September, before rising 52 basis points to finish the month at6.68% - The spread between the 10-year Treasury and 30-year conforming mortgage rate widened by 12 basis points as Agency MBS sold off relative to Treasuries in response to revived inflation concerns
- The average loan amount rose from
$340 K to$349 K, while the average purchase price climbed from$421 K to$434 K - Credit scores remained essentially flat for cash-out refis and purchases but dropped 7 points for the limited number of rate/term refi locks
JACKSONVILLE, Fla., March 13, 2023 /PRNewswire/ -- Today, Black Knight, Inc. (NYSE:BKI) announced the release of its latest Originations Market Monitor report, looking at mortgage origination data through February 2023 month-end. Leveraging daily rate lock data from Black Knight's 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.
"Mortgage rates ticked up again in February after a brief respite, showing once again just how rate sensitive the market continues to be," said Kevin McMahon, president of Optimal Blue, a division of Black Knight. "Conforming rates dipped below
The month's pipeline data showed overall rate lock dollar volume up
"As rates resumed their upward trajectory in February, borrowers responded predictably, moving toward more rate-favorable offerings," McMahon continued. "That included a shift to jumbos, ARMs and other nonconforming products in the month. With refinance activity basically at a floor, all eyes are on the purchase market. And yet such lock volumes remain more than
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 February'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/.
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