The latest Mortgage Monitor Report from the Data & Analytics division of Black Knight Inc. shows that an unpleasant byproduct of the lending frenzy throughout most of this year is that mortgage companies fared poorly in retaining customers who were looking to refinance.
In the third quarter alone, 2.7 million homeowners refinanced their first mortgages. From January 1 through the end of September, 6.4 million homeowners refinanced, and Black Knight says the total could exceed 9 million by year-end.
“However, despite record levels of incentive and lending, mortgage servicers continue to struggle to retain customers, losing the business of more than 80 percent of homeowners who refinance,” says Black Knight Data & Analytics President Ben Graboske.
“Pricing appears to be a significant factor in servicers’ ability to retain customers, as homeowners who changed lenders received noticeably better rates than those whose business was retained,” he adds. “In today’s rate environment, and up against fierce competition, lenders need the most precise product and pricing intelligence available.”
The data also show that 2020 is on pace to reach nearly $4.4 trillion in first-lien mortgage originations in the calendar year – by far, the largest volume on record. The third quarter saw record levels of refinance lending, at $867 billion, purchase lending ($455 billion) and total lending ($1.3 trillion).
Black Knight’s rate-lock data suggest origination volumes could remain at or above those record levels through Q4 2020, as well. Factoring in a 45-day lock-to-close timeline, and assuming consistent lock-to-close rates, purchase volume is likely to remain roughly level in Q4 2020, while refinances and total lending could edge slightly higher (+5% and +2%, respectively).
For more details, look at the October 2020 Mortgage Monitor Report.