Black Knight, now a part of Intercontinental Exchange, has released its latest Originations Market Monitor report, examining mortgage activity through the end of August by leveraging daily rate lock data.
“August was another rough month for mortgage borrowers from an interest rate perspective,” says Andy Walden, vice president of enterprise research and strategy at Black Knight. “Indeed, 30-year conforming rates reached as high as 7.25% late in the month, hitting their highest point in more than 20 years.
“Current housing market dynamics continue to put a damper on mortgage demand. Rates did edge down toward the end of August, but prospective homebuyers still face the least affordable housing market in nearly 40 years.”
The month’s pipeline data showed rate lock activity fell for the third consecutive month, dropping 1.5% overall. Purchase locks, which have accounted for 88% of all activity for the fourth straight months, fell 1.9% from July. Longer-term, purchase lock counts are down 22% year over year and 34% off August 2019 pre-pandemic levels.
Cash-out refinances remained relatively flat (0.3%), halting a two-month decline but more than 85% below the peak monthly volumes seen back in 2021. Rate/term refinances increased by a modest 1.9% for the second straight month but remain down almost 20% year over year and an astonishing 98% off the record highs set back in 2020. Locks on such products will likely remain constrained for some time to come, as Black Knight loan-level data shows that less than 3% of existing mortgage holders have first-lien rates at or above today’s levels
“Interestingly, we saw very slight upticks in both cash-out and rate/term refinance locks in August,” Walden continues. “From what the data is showing us, much of this still very scarce activity is occurring among first-lien holders with older mortgages, or with particularly low balances, for whom today’s rates become less of an issue.
“With the purchase market essentially gridlocked, but homeowner equity within inches of an all-time high, we’ll continue to keep a close eye on the market for further signs of whether, how and to what degree American homeowners access that equity.”
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