Black Knight Inc. has released its latest Originations Market Monitor report, looking at mortgage origination data through the end of March by leveraging daily rate lock data from Black Knight’s Optimal Blue PPE pricing engine. It tracked conforming 30-year rates daily throughout March as they topped 4.9% before pulling back and finishing the month at 4.79%. The spread between mortgage rates and 10-year Treasuries climbed another 20 basis points as the rise in mortgage rates outpaced the ~50 basis point rise in Treasury yields.
“Mortgage interest rates spiked in March, with 30-year offerings climbing 70 basis points over the course of the month,” observes Scott Happ, president of Optimal Blue, a division of Black Knight. “Despite seeing the fastest one-month rise in rates in nearly 13 years, we saw purchase lock volumes increase by 31 percent from February – likely as prospective buyers moved to lock in their loans before rates climbed any higher.”
The month’s pipeline data showed overall rate locks up 19.1% from February, driven by a 31.5% surge in purchase lending activity. While cash-out refinance locks remained relatively flat (+1.6%), rate/term refinance activity continued to slide, with March marking the sixth consecutive monthly decline. The continued decline in rate/term refinance locks pushed the refi share of the market down to just 28%, the lowest point since November 2018.
Non-conforming loan products continued to gain market share at the expense of agency volumes as the pace of home price growth has reached new record highs. Pull-through rates – the share of locks that result in funded loans – fell on both purchase and refinance locks, with refi pull-through falling to just 65.7%.
“As home prices continue to climb – even in the face of sharply rising interest rates – we’ve seen the average loan amount rise as well,” Happ continues. “The average loan rose by $8,000 to just under $362,000 in March, representing a more than 23 percent increase over February’s rise. In turn, non-conforming products – including both jumbos and loans with expanded guidelines – continued to take market share from conforming loans and accounted for a full 18 percent of the month’s lock activity. The FHA share of lock activity also rose on strong purchase lending demand.”
Read the full report here.
