- Optimal Blue Mortgage Market Indices from Black Knight
tracked 30-year rates as they rose 34 basis points (BPS) overall
throughout the month to finish October at 7.06%, the highest level
in more than 20 years
- The impact of elevated rates has been clear on overall lock
volumes, which dropped more than 14% in October, and are now down
30% over the past three months and 61% off last year's level
- October's decline was led by yet another steep drop (-25.1%)
in cash-out locks and further deterioration (-15.7%) in the
rate/term market – ultimately, refis made up just 14% of the
month's lock activity
- Interest rates and affordability challenges continue to put
downward pressure on purchase lending as well, with the dollar
volume of such locks 13% off the prior month and down 39% from
October 2021
- Purchase lock counts – which exclude the impact of rising home
prices – were down 37% year over year and 26% compared to
pre-pandemic levels in 2019
- Credit scores fell across the board with cash-out borrower
average scores falling another 3 points; the average credit score
on cash-out refinances is now at 690, 37 BPS lower than the same
time last year
- Adjustable-rate mortgages (ARMs) are gaining in popularity as
affordability pressures rise, rising to account for 13.1% of
October lock activity, up from 11.3% in September
- After seeing a brief uptick In September, both the average
purchase price and average loan amount fell in October to
$423,000 and $337,000, respectively
JACKSONVILLE, Fla., Nov. 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 October 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 interest rates now at their highest level in 20 years, the
refi market is rapidly approaching a bottom," said Scott Happ, president of Optimal Blue, a
division of Black Knight. "Indeed, our most recent Mortgage Monitor
report showed that the number of borrowers with rate incentive to
refinance has hit an all-time low of around 130K, and the vast majority of those are at least
14 years into a 30-year mortgage, with little incentive to restart
the clock."
The month's pipeline data showed overall rate lock dollar volume
down 14.3% month over month and at the lowest level since
February 2019. The decline was
broad-based but driven by a 25.1% decline in cash-out refinance
locks. With tappable equity near all-time highs earlier in the
year, cash-outs had shown some early resilience even as rates began
to rise. They're now down 83.6% from October
2021. Rate/term refinance activity fell an additional 15.7%
after holding steady in September and is down 92.6% year over year.
All in all, refinance locks made up just 14% of the month's
activity.
Purchase lending faced continued downward pressure from
affordability constraints, with rising rates offsetting recent
pullbacks in home prices. By dollar volume, such locks were down
13% from September and 39% from October
2021. When looking specifically at the number of purchase
locks to exclude the impact of record home price growth over the
last several years, we see it was down 37% year over year and 26%
compared to pre-pandemic levels in 2019.
"Affordability remains the overarching concern in the mortgage
origination market right now," Happ continued. "Despite home prices
continuing to pull back in a growing number of markets across the
country, the current rate environment means affordability remains a
thorny challenge. It's therefore not very surprising to see a
resurgence of somewhat lower-rate loan products like ARMs.
Affordability, rates and home values all factor into falling
purchase prices and loan sizes and all are generating headwinds
over and above the normal seasonal downturn."
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 October'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.