April MCTlive! Lock Volume Indices shows that after an upward trend in March, lock volume decreased slightly across the board for the month. Purchase lock activity was down 3% compared to March, rate/term refinance volume was down 2%, and cash-out refinance volume was down 3.6%. Lock activity in total was down 3% versus March.
While there was a slight downturn in April, we should see lock activity begin to trend upward as the Fed reaches the terminal Fed funds rate and we begin to move into the Spring. As it stands, total lock activity is still down 29.75% from a year ago. That is primarily due to a drop off in refinance demand, as purchase lock activity sits 24.6% lower than at the same point last year. Rate and term refinance volume is down 56.87% from one year ago, and cash-out refinance volume is down 65% over that same period.
It is important to note that MCT’s rate lock activity indices are based on actual dollar volume of locked loans, not number of applications. Especially in a tight purchase market, MCT believes its methodology (using actual loans locked vs. applications) is a more reliable metric. There is a higher likelihood of having multiple applications per funded loan, and prequals do not convert at as high of a rate in the current market as has historically been the case – especially when applications are counted at the early stage of entering a property address.
MCT Data represents a balanced cross section of several hundred lenders among retail, correspondent, wholesale, and consumer direct channels. A broad-based view of the entire market provides a more accurate picture of mortgage originations versus indices that are influenced by mega lenders. The April MCTlive! Lock Volume Indices is broken out by transaction type: purchase, rate/term refinance, and cash out refinance.
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