Black Knight Originations Market Monitor: Rate Lock Activity Falls for Fourth Consecutive Month; Rate/Term Refis Fall to Lowest Level in Two Years

Rhea-AI Summary

Black Knight, Inc. (NYSE:BKI) released its latest Originations Market Monitor report, revealing a significant decline in mortgage rate locks in December. Total locks decreased by 35% year-over-year, and down 18.3% from November, largely due to higher interest rates and seasonal factors. Purchase loan locks fell 22.5%, while refinance lending activity dropped to its lowest level in two years. Despite these trends, cash-out refinances rose 18% year-over-year, supported by high home equity levels. The average loan amount at year-end increased to $341,000.

Positive

• Cash-out refi locks increased by nearly 18% year-over-year.
• Non-conforming loan products gained market share at the expense of agency volumes.

Negative

• Total mortgage rate locks down 35% year-over-year.
• Purchase loan locks fell by 22.5% from the previous month.
• Rate/term refinance lending dropped to the lowest level in two years.

JACKSONVILLE, Fla., Jan. 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 December 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.

"With the Federal Reserve speeding the tapering of its bond buying and indicating multiple rate hikes in 2022 to curb inflation, 30-year conforming rates sat above 3.3% for much of December," said Scott Happ, president, Black Knight Secondary Marketing Technologies. "Indeed, our OBMMI daily interest rate tracker showed average rates at year's end within just two basis points of the 2021 high of 3.37%. Likely in response to those rising rates – and the seasonal slowdown in home purchases – we saw locks decline across all product types in December, with total volume down 35% year-over-year."

The month's pipeline data showed overall rate locks down 18.3% from November, driven by a 22.5% drop in purchase loan locks. Despite the decline, purchase locks were up marginally on a year-over-year basis. Rate/term refinance lending activity continued to tumble, falling another 17% to hit the lowest level for such lending in two years. The drop in purchase lock volume increased the refinance share of the market to 48%, though it also coincided with average refinance credit scores that were 20 points lower than this time last year. This is not unfamiliar behavior as higher-credit borrowers tend to sit out rising rate environments, which brings down the overall average. Non-conforming loan products continued to gain market share at the expense of agency volumes in December as the average loan amount rose another $4,000 to finish the year at $341,000.

"Seen in the light of the normal seasonal slowdown in home sales as well as our current rate environment, December's more than 20% drop in purchase loan locks isn't all that surprising," Happ continued. "Neither was the continued decline in rate/term refinance lending, though the size of the annual decline is noteworthy, if not sobering. While cash-out refi locks were also down for the month, they're still up nearly 18% from the same month last year as the product remains somewhat insulated by borrowers taking advantage of soaring home equity levels."

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 December's origination activity can be found in the full Black Knight Originations Market Monitor report located here.

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 the Black Knight report indicate for December 2022 regarding mortgage rate locks?

The report indicated that total mortgage rate locks decreased by 35% year-over-year and 18.3% from November.

What trends were observed in purchase loan locks according to Black Knight?

Purchase loan locks fell by 22.5% in December but were up slightly year-over-year.

What was the average loan amount reported by Black Knight in December?

The average loan amount rose to $341,000 at year-end.

How did refinance lending activity change in December 2022?

Refinance lending activity fell to the lowest level in two years, with a 17% decline.