Black Knight Originations Market Monitor: Refinance Rate Locks Drop Across the Board in February as 30-Year Rates Climb Above 4% for First Time in Over Two Years

Rhea-AI Summary

Black Knight, Inc. (NYSE:BKI) released its Originations Market Monitor report for February 2022, highlighting significant trends in mortgage origination. The report notes that the 30-year conforming mortgage rate surpassed 4% for the first time in over two years, closing the month at 4.09%. Rate locks dropped 5.4% from January, with refinance locks down 15.3% and 34.1%, respectively. However, purchase lending saw a 7.2% increase month-over-month, driven by strong homebuyer demand. The average home loan amount increased to just under $354,000.

Positive

• Increase in purchase lending by 7.2% month-over-month.
• Average home loan amount rose to just under $354,000.
• Nonconforming products gained market share.

Negative

• Refinance locks fell by 15.3% and rate/term refinances down 34.1%.
• Rate/term refinance lending at the lowest level in three years.
• Average pull-through rate for refinances dropped to 68.6%.

JACKSONVILLE, Fla., March 14, 2022 /PRNewswire/ -- Today, Black Knight, Inc. (NYSE:BKI) announced the release of its latest Originations Market Monitor report, looking at mortgage origination data through February 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.

"As we noted back in November, the Federal Reserve's unwinding of its bond buying program has been having a stronger impact on mortgage rates than Treasury yields," said Scott Happ, president, Optimal Blue, a division of Black Knight. "Driven by Fed policy and exacerbated by global instability, we've seen the spread between 30-year conforming rates and 10-year Treasury yields climb more than 40 basis points in just three months, topping 2.25% in February. Our OBMMI daily interest rate tracker showed the average 30-year conforming rate top 4% in February for the first time in more than two years, closing out the month at 4.09%."

The month's pipeline data showed rate locks falling 5.4% from January, driven by declines in both cash-out and rate/term refinance locks, which saw month-over-month drops of 15.3% and 34.1%, respectively. Rate/term refinance lending activity was down for the fifth consecutive month – falling to the lowest level in three years – and is now more than 80% off 2021 levels. Cash-out locks – which have been somewhat buffered from rising rates by soaring home values – registered a 6.3% year-over-year decline in February. Nonconforming loan products continued to gain market share at the expense of agency volumes as the pace of home price growth has reaccelerated. Pull-through rates – the share of locks that result in funded loans – fell on both purchase and refinance locks, with refi pull-through falling to just 68.6%.

"While refinance activity took a hit in February due to sharp rises in conforming rates, purchase lending rose again on strong homebuyer demand," Happ continued. "The 7.2% month-over-month increase in purchase locks pushed February purchase volumes up 5.6% from the same time last year. The average home loan amount continues to climb in the face of rising home prices and tightening affordability. Indeed, February's $6,500 jump pushed that average to just under $354,000. In turn, nonconforming products – including both jumbos and loans with expanded guidelines – accounted for a full 17% of the month's lock activity."

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 were the key findings of the Black Knight BKI Originations Market Monitor report for February 2022?

The report revealed a decline in rate locks by 5.4%, with refinance locks dropping significantly while purchase locks increased by 7.2%.

How did the mortgage rates change in February 2022 according to Black Knight?

The 30-year conforming mortgage rate climbed to 4.09%, marking the first time it exceeded 4% in over two years.

What is the impact of rising mortgage rates on refinance activity for BKI?

Refinance activity declined sharply, with locks falling 15.3%, indicating a significant slowdown in refinancing due to rising rates.

What trends did Black Knight observe regarding purchase lending in February 2022?

Purchase lending experienced a 7.2% increase from January, showing strong demand among homebuyers despite rising rates.