Black Knight Originations Market Monitor: Lock Volume Drops Sharply on Rising Rates as August Production Hits Four-Year Low

Rhea-AI Summary

Black Knight, Inc. (NYSE:BKI) released its latest Originations Market Monitor report, indicating a substantial decline in mortgage lock volumes. Overall rate locks fell by nearly 9% in August, marking the lowest levels since December 2019. The average purchase price dropped by $12K (-2.7%) and $43K (-9.2%) since March. Rate/term refinances plummeted 94.5% year-over-year. The refi share held steady at a record low of 18%. The report highlights ongoing affordability challenges in the mortgage market as home prices recede in some areas.

Positive

• The average purchase price among homes financed fell by $12K (-2.7%) in August, indicating a potential increase in affordability for buyers.
• Black Knight's Optimal Blue Mortgage Market Indices provide comprehensive tracking of mortgage origination data.

Negative

• Total lock volumes decreased nearly 9% from July, indicating a declining mortgage market.
• Purchase lock counts are down 30% from last year and 16.1% from 2019, reaching their lowest levels in over four years.
• Refinance activity has dropped significantly, with rate/term refinances down 94.5% year-over-year and cash-out refinances down 72.2%.
• The average loan amount dropped for the fifth consecutive month to $340K, signaling a decline in borrowing capacity.

• Black Knight's Optimal Blue Mortgage Market Indices tracked 30-year rates as they started the month at a recent low point and rose 50 basis points to finish the month at 5.8%
  
  
• Total lock volumes were down nearly 9% from July, with declines in both rate/term (-13.9%) and cash-out (-8.9%) refinances; purchase loans, which accounted for 82% of all activity, were down 8.7%
  
  
• Purchase lock counts, which exclude the impact of soaring home values on dollar volume, are off 30% from last year and 16.1% from 2019, hitting their lowest August levels in more than four years
  
  
• July marks the second consecutive month that the number of purchase locks has fallen below pre-pandemic levels amid affordability headwinds
  
  
• The average purchase price among homes being financed fell by almost $12K (-2.7%) in August and is now down by more than more than $43K (-9.2%) since March
  
  
• The average loan amount dropped another $4K in August to $340K, the fifth consecutive drop, as home prices fell month over month for the first time in three years

JACKSONVILLE, Fla., Sept. 12, 2022 /PRNewswire/ -- Today, Black Knight, Inc. (NYSE:BKI) announced the release of its latest Originations Market Monitor report, looking at mortgage origination data through August 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.

"Mortgage originators continue to feel the effects of interest rate and affordability challenges," said Scott Happ, president of Optimal Blue, a division of Black Knight. "Facing headwinds of higher rates and a move into the traditionally slower purchasing months, rate lock volumes fell nearly 9% overall in August to their lowest level since December 2019. Purchase lock counts, which exclude the impact of soaring home values on volume, are off 30% from last year. That count is now down more than 16% from 2019, marking the second consecutive month the number of purchase locks have fallen below pre-pandemic levels, as well as the lowest August count in more than four years."

The month's pipeline data showed overall rate lock dollar volume down 8.9% month over month, led by a 13.9% decline in rate/term refinance locks, which are now down 94.5% since last year. Cash-out refinance activity fell another 8.9% from July – a 72.2% year-over-year decline. The refi share of the market held at 18%, the lowest share on record dating back to January 2018. Government loan products continued to gain market share as FHA lock activity increased at the expense of both conventional and non-conforming loan volumes, a trend also likely reflected in another decline in the average loan amount – from $344K to $340K. The overall average credit score in August held steady at 722.

"Interest rates rose again in August after retreating slightly in July," Happ explained. "This continues to have profound effects on home affordability, which returned to near 35-year lows to close out the month. As we reported last month, home prices have begun to pull back in some of the hotter home markets, particularly those on the West Coast. Likewise, we've observed declines in both the average purchase price and average amount financed in each of the past 5 months, with each now down 9% since March. We will keep a close eye on this trend as the market moves into the traditionally slower purchasing months ahead."

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 August'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

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/black-knight-originations-market-monitor-lock-volume-drops-sharply-on-rising-rates-as-august-production-hits-four-year-low-301621087.html

SOURCE Black Knight, Inc.

FAQ

What does the latest report from Black Knight (BKI) indicate about mortgage lock volumes?

The report indicates a nearly 9% decline in total lock volumes in August, the lowest since December 2019.

What factors are contributing to the decline in mortgage locks for Black Knight (BKI)?

The decline is attributed to rising interest rates and ongoing affordability challenges in the housing market.

How has the average purchase price changed according to Black Knight (BKI)?

The average purchase price fell by $12K (-2.7%) in August, and has decreased by more than $43K (-9.2%) since March.

What is the current refinance market situation for Black Knight (BKI)?

The refinance share is at a record low of 18%, with rate/term refinances down 94.5% year-over-year.

Why are purchase lock counts significant in the Black Knight (BKI) report?

Purchase lock counts are significant as they reflect homebuyer activity; they are down 30% from last year and below pre-pandemic levels.