The Black Knight Originations Market Monitor report for March shows that rate-lock dollar volume rose 43% in March, driven by falling interest rates and strong purchase market performance, especially among FHA products.
The benchmark 30-year mortgage climbed to the highest level of the year, touching 6.8% before reversing course to finish the month at 6.4%, down 28 bps month over month, according to Black Knight.
Overall lock volumes nearly doubled over the last three months but remain at around half of last year’s levels. Purchase lock volumes jumped 44% in the month, though they remain down 40% from the same month in 2022.
Cash-out refinances rose 31% from January and are now down 80% from last year. Rate/term refinances rose 36% and remained down 71% from the same month in 2022.
The refi share of lock volume edged down to 13%, despite the surge, due to the larger increase in purchase locks.
Black Knight says it is not unusual for rate locks to surge in March ahead of the spring homebuying season, although this year’s rise outpaced what is typically seen on a seasonal basis.
Notably, a cooling market has made sellers more receptive to FHA offers. That, combined with a recent reduction in FHA mortgage insurance premiums and a mid-month increase in the FHA-to-conforming spread, made FHA loans comparatively more attractive. FHA share increased to more than 20% of the pipeline in March, up from an 18% share at the beginning of the year and 12% a year ago.
The share of locks with adjustable rates fell in March to less than 9%, as borrowers took advantage of falling rates and shifted toward fixed-rate products.
For more from the Originations Market Monitor, click here.