Black Knight Originations Market Monitor: Rate Locks Rise in January on Rate Relief and Seasonal Tailwinds, Breaking 9-Month Decline

Rhea-AI Summary

In January, Black Knight (NYSE: BKI) reported a significant rebound in rate lock volumes, increasing by 32% month-over-month, driven by declining mortgage rates, which dropped 36 basis points to 6.16%. Both purchase and refinance volumes saw proportional increases, with cash-out refinances up 25%. However, despite this rise, purchase lending remains challenged with dollar volumes down 44% year-over-year. The report indicates that overall rate lock activity is still more than 60% lower than the same period last year, highlighting ongoing market pressures. The update reflects a cautious optimism amid persistent affordability challenges.

Positive

• Rate lock volumes rose 32% month-over-month in January.
• 30-year mortgage rates decreased to 6.16%, a drop of 36 basis points.
• Purchase (+32%) and refinance volumes increased, indicating a market rebound.

Negative

• Dollar volume of purchase locks down 44% year-over-year.
• Purchase lock counts decreased 41% year-over-year.
• Overall rate lock activity is more than 60% lower than a year ago.

-- Rate lock volumes rose 32% in January driven by declining rates and seasonal tailwinds, snapping a 9-month streak of declines

-- Purchase (+32%) as well as both rate/term (+37%), and cash-out (+25%) refinance volumes increased proportionally, with refinance locks making up 15% of the month's overall activity

-- Optimal Blue Mortgage Market Indices from Black Knight showed 30-year rates dropping 36 basis points to 6.16%, continuing a downward trend that began in November 2022

-- Despite the improvement, rate and affordability pressures continue to challenge purchase lending, with the dollar volume of such locks down 44% year over year and 14% below January 2020 levels

-- Purchase lock counts – which exclude the impact of home price changes – were down 41% year over year

-- Nonconforming loans – including jumbos and expanded guidelines – fell as a percentage of total volumes to just under 10%; conforming (58.5%), FHA (18.5%) and VA (12.4%) all picked up share

-- The average loan amount rose from $336K to $340K, while the average purchase price climbed from $419K to $421K

-- Credit scores fell 4 points among cash-out refis – now down 36 points over the past 12 months – and 9 points for rate/terms, but remained relatively unchanged (+1 point) for purchase transactions

-- The ARM share of lending dropped further in January to just above 8% of total locks, as lower rates pushed borrowers back toward fixed-rate offerings

JACKSONVILLE, Fla., Feb. 13, 2023 /PRNewswire/ -- Today, Black Knight, Inc. (NYSE: BKI) announced the release of its latest Originations Market Monitor report, looking at mortgage origination data through January 2023 month-end. Leveraging daily rate lock data from the Black Knight Optimal Blue PPE – mortgage lending's most widely used product, pricing and eligibility engine – the Originations Market Monitor provides the industry's earliest and most comprehensive view of origination activity.

"Mortgage rates declined in January, continuing a trend that began in early November 2022," said Kevin McMahon, president of Optimal Blue, a division of Black Knight. "Conforming rates dropped 36 basis points from where they were at the start of the year, and we saw that rates associated with those FHA/VA/jumbo locks all came down in kind. Triggered by this pullback, rate lock volumes rose for the first time since March 2022, driven by declining interest rates and seasonal tailwinds, snapping a nine-month streak of declines."

The month's pipeline data showed overall rate lock dollar volume up 32% month over month, with increases seen across the board; purchase (+32%), rate/term (+37%) and cash-out (+25%) lock volumes were all up proportionally. Combined, refinance locks made up 15% of the month's activity, still historically low and indicative of the very small amount of refinance incentive in today's market. On a geographical level, the largest 20 MSAs by lock volume all saw double-digit growth, with Chicago, Nashville and Charlotte producing 50% month-over-month gains from December.

"While this month's Originations Market Monitor certainly brings welcome news, it's important to remember that we would have expected to see a seasonal rebound in January, regardless," McMahon continued. "Mortgage originations continue to face significant rate, affordability and inventory headwinds, and lock volumes are still down more than 60% from the comparable period last year. With rates picking back up in early February, it will be interesting to see whether the rebound in lock activity will hold."

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 January'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.

FAQ

What are the recent trends in mortgage rates reported by Black Knight?

In January, Black Knight reported that mortgage rates decreased by 36 basis points to 6.16%, continuing a downward trend that began in November 2022.

How did rate lock volumes perform in January 2023 for Black Knight?

Rate lock volumes increased by 32% month-over-month in January 2023 after a nine-month decline.

What challenges is Black Knight facing in the mortgage market?

Despite the increase in rate lock volumes, Black Knight noted significant challenges, with purchase lending volumes down 44% year-over-year.

What percentage of locks were refinance in January 2023 for Black Knight?

Refinance locks accounted for 15% of the month's overall activity.

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

The average loan amount rose from $336,000 to $340,000 in January 2023.