Black Knight Originations Market Monitor: Mortgage Activity Falls as Rates Hit Two-Decade High Amid Seasonal Headwinds

Rhea-AI Summary

Mortgage rates climbed above 7.25% in August, the highest in over 20 years, but settled at 7.07% by month-end. Rate lock volumes fell 1.5% from July, driven by a 1.9% decrease in purchase volume. Purchase lock counts were down 22% YoY and 34% compared to pre-pandemic levels. Average purchase price decreased to $450K, with an average loan amount of $352K in August. Adjustable-rate mortgages dropped to 6.56% of lock activity. Overall, the housing market dynamics and high interest rates continue to dampen mortgage demand.

Positive

• Mortgage rates settled at 7.07% by the end of August, slightly lower than the peak of 7.25%.
• Average purchase price decreased to $450K in August.

Negative

• Rate lock volumes fell 1.5% from July, indicating a decline in mortgage demand.
• Purchase lock counts were down 22% YoY and 34% compared to pre-pandemic levels.

• According to the Optimal Blue Mortgage Market Indices, 30-year conforming rates climbed above 7.25% in August, the highest level in more than 20 years, before settling to 7.07% at the end of the month
• Overall rate lock volumes were down for the third consecutive month, falling 1.5% from July, driven by a 1.9% decrease in purchase volume
• Purchase lock counts were down 22% year over year and 34% compared to 2019 pre-pandemic levels, as higher interest rates and the tightest affordability since the early 1980s dampened demand
• As reported in Black Knight's August Mortgage Monitor report, signs of credit tightening have been seen in rising down payments, falling loan-to-value ratios and higher credit scores
• Average purchase price edged lower for the second straight month to $450K, with an average loan amount of $352K in August
• The average credit score among primary residence purchase locks dropped slightly for the first time since November 2022, but remains close to an all-time high
• The share of adjustable-rate mortgages (ARMs) continued to fall, dropping to 6.56% of August's lock activity, as rate offerings for such products continue to be less competitive against fixed products

JACKSONVILLE, Fla., Sept. 11, 2023 /PRNewswire/ -- Today, Black Knight, now a part of Intercontinental Exchange (NYSE:ICE), announced the release of its latest Originations Market Monitor report, looking at mortgage activity through August 2023 month-end. Leveraging daily rate lock data from the Optimal Blue PPE, the Originations Market Monitor provides the industry's earliest and most comprehensive view of origination activity.

"August was another rough month for mortgage borrowers from an interest rate perspective," said Andy Walden, vice president of enterprise research and strategy at Black Knight, now a part of ICE. "Indeed, 30-year conforming rates reached as high as 7.25% late in the month, hitting their highest point in more than 20 years. Current housing market dynamics continue to put a damper on mortgage demand. Rates did edge down toward the end of August, but prospective homebuyers still face the least affordable housing market in nearly 40 years."

The month's pipeline data showed rate lock activity fell for the third consecutive month, dropping 1.5% overall. Purchase locks, which have accounted for 88% of all activity for the fourth straight months, fell 1.9% from July. Longer-term, purchase lock counts are down 22% year over year and 34% off August 2019 pre-pandemic levels. Cash-out refinances remained relatively flat (0.3%), halting a two-month decline but more than 85% below the peak monthly volumes seen back in 2021. Rate/term refis increased by a modest 1.9% for the second straight month but remain down almost 20% year over year and an astonishing 98% off the record highs set back in 2020. Locks on such products will likely remain constrained for some time to come, as Black Knight loan-level data shows that less than 3% of existing mortgage holders have first-lien rates at or above today's levels

"Interestingly, we saw very slight upticks in both cash-out and rate/term refinance locks in August," Walden continued. "From what the data is showing us, much of this still very scarce activity is occurring among first-lien holders with older mortgages, or with particularly low balances, for whom today's rates become less of an issue. With the purchase market essentially gridlocked, but homeowner equity within inches of an all-time high, we'll continue to keep a close eye on the market for further signs of whether, how and to what degree American homeowners access that equity."

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 Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks to connect people to opportunity. We provide financial technology and data services across major asset classes that offer our customers access to mission-critical workflow tools that increase transparency and operational efficiencies. We operate exchanges, including the New York Stock Exchange, and clearing houses that help people invest, raise capital and manage risk across multiple asset classes. Our comprehensive fixed income data services and execution capabilities provide information, analytics and platforms that help our customers capitalize on opportunities and operate more efficiently. At ICE Mortgage Technology, we are transforming and digitizing the U.S. residential mortgage process, from consumer engagement through loan registration. Together, we transform, streamline and automate industries to connect our customers to opportunity.

Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading "Key Information Documents (KIDS)."

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.