Black Knight Originations Market Monitor: Rate Lock Volumes Jump 43% in March on Seasonal Tailwinds, Falling Rates and Lower FHA Insurance Premiums

Rhea-AI Summary

Black Knight, Inc. (NYSE: BKI) reported significant increases in mortgage rate lock volumes for March 2023, attributing a 43% rise month-over-month to seasonal factors, falling interest rates, and a robust purchase market. Purchase locks surged by 44%, while cash-out refinances rose 31% and rate/term refinances increased by 36%. Despite these gains, refinance activity fell to a 13% market share, a record low this cycle. The Federal Housing Administration (FHA) captured 20% of the pipeline, up from 18% at the start of the year. However, purchase lock counts are 37% lower than last year and 12% below pre-pandemic levels. The average 30-year mortgage rate climbed to 6.8% before declining to 6.4% by month-end due to banking sector uncertainty.

Positive

• Rate lock dollar volumes increased by 43% month-over-month in March.
• Purchase locks rose by 44%, significantly above the average increase of 30% seen in previous years.
• Cash-out refinances and rate/term locks grew by 31% and 36%, respectively.

Negative

• Refinance locks fell to a cycle low of 13% of the overall activity, indicating a significant decline.
• Despite month-over-month increases, purchase lock counts remain 37% lower than last year and 12% below pre-pandemic levels.

• Rate lock dollar volumes were up 43% month over month in March, driven by seasonal tailwinds, falling interest rates and stronger purchase market performance
• Lock volumes increased across the board, with purchase locks increasing 44% in the month, well above the 30% average February to March gain seen across the past 5 years
• Cash-out refinances were up 31% and rate/term locks grew by 36%, but both remain historically low
• FHA lock volume captured additional market share, accounting for 20% of the March pipeline, up from 18% at the beginning of the year and 12% a year earlier
• The disproportionate rise in purchase locks pushed refinance volumes to a current cycle low with a 13% share of the pipeline
• Despite the month-over-month gains, purchase lock counts – which exclude the impact of home price changes – remain well below both last year's (-37%) and pre-pandemic (-12% against March 2019) levels
• ARM share fell to less than 9% of the month's lending as borrowers took advantage of falling rates and shifted toward fixed-rate products
• The Optimal Blue Mortgage Market Indices from Black Knight tracked 30-year rates as they climbed to the highest levels of the year in March, reaching 6.8%
• Uncertainty in the banking sector triggered downward movement in 30-year offerings, which finished March at 6.4%, down 28 basis points from the start of the month

JACKSONVILLE, Fla., April 10, 2023 /PRNewswire/ -- Today, Black Knight, Inc. (NYSE: BKI) announced the release of its latest Originations Market Monitor report, looking at mortgage origination data through March 2023 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.

"This continues to be an incredibly rate-sensitive housing market, and March's rate lock activity perfectly illustrates this dynamic," said Andy Walden, vice president of enterprise research at Black Knight. "Early in the month, when rates started their climb back toward 7% – reaching 6.8% in the process – we saw pronounced downward pressure on originations. In the wake of uncertainty in the banking sector and investors' flight to the safe haven of U.S. Treasuries, rates came down roughly a quarter of a point. The result? Another quick surge in originations, particularly in the purchase market."

The month's pipeline data showed overall rate lock dollar volume up 43% over February, with purchase locks rising 44%, cash-out refinances up 31% and even rate/term refis, which had been hovering near historic lows, up 36%. Despite the rebound, refinance locks fell to just 13% of the month's activity, a new low for this cycle, due to the disproportionate rise in purchase locks.

"It is not unusual for rate locks to surge in March ahead of the spring homebuying season, although this year's rise outpaced what we typically see on a seasonal basis," Walden continued. "A cooling market lacking the multiple bids and all-cash offers of the recent past has made sellers more receptive to FHA offers. That, combined with a recent reduction in FHA mortgage insurance premiums and a mid-month increase in the FHA-to-conforming spread, made FHA loans comparatively more attractive. FHA share increased to more than 20% of the pipeline in March, up from 18% at the beginning of the year and 12% a year ago."

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 March'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 michelle.kersch@bkfs.com	704.890.8158 mitch.cohen@bkfs.com

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SOURCE Black Knight, Inc.

FAQ

What was the percentage increase in mortgage rate lock volumes for March 2023 according to Black Knight?

Black Knight reported a 43% increase in mortgage rate lock volumes for March 2023.

How much did purchase locks increase in March 2023?

Purchase locks increased by 44% in March 2023.

What is the current market share of refinance locks as reported in the March 2023 update by Black Knight?

Refinance locks accounted for 13% of the market share in March 2023, a new low for the cycle.

What was the average 30-year mortgage rate as reported by Black Knight in March 2023?

The average 30-year mortgage rate climbed to 6.8% and then decreased to 6.4% by month-end.

How did FHA loan market share change in March 2023?

FHA loan market share increased to 20% of the pipeline in March 2023, up from 18% at the beginning of the year.