Black Knight: ‘Sharp Divergence’ Between Purchases and Refis in March

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The inaugural Originations Market Monitor report from Black Knight Inc. – a new monthly study that leverages daily rate-lock data from Black Knight’s Optimal Blue PPE to provide a view of origination activity – shows that while overall rate locks were up 2.5% for the March, there was a sharp divergence between purchase and refinance activity.

“Recent – and sharp – upward movements in interest rates have shifted the mortgage originations landscape very quickly,” says Black Knight Secondary Marketing Technologies President Scott Happ. “The wave of refinance activity of the last year and some months has suddenly given way to a purchase-heavy mix.”

Purchase locks were up 32% from February and nearly 70% since the start of 2021, with cash-out refis up a marginal 4.1% for the month. Refinances in which the borrower is securing a better rate or term for their mortgage fell drastically, down more than 26% for the month and more than 35% since December.

“It’s little wonder that rate/term refinance activity would be down in March – our OBMMI interest rate tracker shows the average conforming 30-year rate offering came in at 3.34 percent at month’s end, 60 BPS higher than at the end of February,” Happ notes.

“The decline in rate/term lending has shifted the originations market mix to 52 percent purchase and 48 percent refi. This marks the first time – but almost certainly not the last – that purchase loans have made up a majority share of monthly mortgage lending since December 2019. We also saw credit scores pull back: a trend that’s likely to continue among refis as high-credit borrowers, who have been largely driving record volumes, exit the market.”

Each month, the Originations Market Monitor will publish a series of key indicators drawn from Optimal Blue PPE data, as well as secondary market insight from Black Knight’s hedging platforms.

More detail on March’s origination activity can be found in the full Originations Market Monitor Report.

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