Black Knight, Inc. released 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. Conforming 30-year rates throughout February climbed above 4% for the first time since November 2019, finishing the month at 4.09%.
“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.”
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