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Black Knight Reports That Mortgage Rate Locks Have Now Fallen For The 3rd Straight Month

Black Knight, Inc. (NYSE:BKI) released 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. Here’s what they found:

“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.