Black Knight Originations Market Monitor: Purchase Locks Fall 22% in November Despite Lower Rates; Seasonal Slowdown Amplified by Affordability, Inventory Pressures

• The Optimal Blue Mortgage Market Indices from Black Knight showed 30-year rates fell 48 basis points in the month to finish November at 6.58%; but still 3.3 percentage points higher than this time last year
  
  
• Despite the rate reduction, overall lock volumes dropped 21.5% in November and are now down 39% over the past three months and 68% off last year's level
  
  
• All loan purposes were off by similar amounts, with purchase locks down 22%, rate/term refis down 17% and cash-out refis down 18%, with total refinance locks making up 15% of the month's overall activity 
  
  
• Headwinds from both interest rates and affordability continue to challenge purchase lending, with the dollar volume of such locks down 37% over the past three months and more than 50% from November 2021  
  
  
• Purchase lock counts -- which exclude the impact of rising home prices -- were down 48% year over year and 27% compared to pre-pandemic levels in 2019
  
  
• Credit scores for cash-out refinances fell 4 points to 686 (down 40 points over the past 12 months) but remained unchanged for purchase and rate/term refinance transactions
  
  
• Adjustable-rate mortgages (ARMs), which surged amid rising rates, pulled back slightly to 10% for the month from 13% in October as the interest rate dip pushed demand back toward fixed rates
  
  
• Nonconforming locks (including jumbo and expanded guidelines) as a share of the month's total volume continued to fall in November, with conforming and FHA locks picking up market share as a result
  
  
• Both the average purchase price and average loan amount fell in November to $414,000 (-1.3% M/M) and $340,000 (-2.2% M/M), respectively

JACKSONVILLE, Fla., Dec. 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 November 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 rates pulled back slightly in November based on what the market perceived as good inflation news," said Scott Happ, president of Optimal Blue, a division of Black Knight. "The spread between mortgage rates and the 10-year Treasury yield narrowed by 13 basis points during the month to 283 basis points in a sign that investors and lenders may be seeking to accelerate the impact of falling rates. But, despite the improvement in rates, lock activity remained subdued."

The month's pipeline data showed overall rate lock dollar volume down 21.5% month over month, remaining at the lowest level since February 2019. The across-the-board decline was driven by a 22% drop in purchase locks, reflecting the strong impact of seasonality, the long Thanksgiving holiday weekend, and the lack of housing inventory. Refinance activity continued to fall by double digits, with cash-outs now down 86% and rate/term down 93% from November 2021. Combined, refinance activity made up 15% of the month's lock activity, a near-record low share. When excluding the impact of record home price growth on volumes over the last several years by looking at the raw number lock counts, the data shows them down 48% year over year and 27% compared to pre-pandemic levels in 2019.

"While we would normally expect some seasonal pullback in activity in November, we are also seeing exceptionally strong headwinds in purchase activity from continued affordability challenges and a refinance market that has dwindled to all but nonexistent levels," Happ continued. "Stalled inventory and rates nearly twice what they were a year ago are combining to negate the benefits of recent home price and rate declines from an affordability perspective."

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 November'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.