Black Knight Inc.’s latest Originations Market Monitor report, looking at mortgage origination data through November month-end, shows that overall rate lock dollar volume was down 21.5% month over month, remaining at the lowest level since February 2019.
The across-the-board decline was driven by a 22% drop in purchase locks, reflecting the strong impact of seasonality, the long Thanksgiving holiday weekend, and the lack of housing inventory.
“Mortgage rates pulled back slightly in November based on what the market perceived as good inflation news,” says Scott Happ, president of Optimal Blue, a division of Black Knight. “The spread between mortgage rates and the 10-year Treasury yield narrowed by 13 basis points during the month to 283 basis points in a sign that investors and lenders may be seeking to accelerate the impact of falling rates. But, despite the improvement in rates, lock activity remained subdued.”
Refinance activity continued to fall by double digits, with cash-outs now down 86% and rate/term down 93% from November 2021. Combined, refinance activity made up 15% of the month’s lock activity, a near-record low share. When excluding the impact of record home price growth on volumes over the last several years by looking at the raw number lock counts, the data shows them down 48% year over year and 27% compared to pre-pandemic levels in 2019.
“While we would normally expect some seasonal pullback in activity in November, we are also seeing exceptionally strong headwinds in purchase activity from continued affordability challenges and a refinance market that has dwindled to all but nonexistent levels,” Happ continues. “Stalled inventory and rates nearly twice what they were a year ago are combining to negate the benefits of recent home price and rate declines from an affordability perspective.”
Read the full report here.