Rising rates and prices have pushed rate locks down for three of the last four months, according to Black Knight’s May Originations Market Monitor…(Black Knight)
- M-O-M: Overall rate lock volume fell 5.8% in May compared to the previous month.
- Y-O-Y: Rate lock volume is now down 31.3% when compared to the same time last year.
Rate/term refis continue to lead the downward trend with a 23.6% decline month-over-month and a 90% decline year-over-year…
- Cash-outs were also down double-digits from April with a 12.0% decline and a 42.0% decline year-over-year.
- Purchases were down for the month with a 2.3% drop but are still up, barely, year-over-year with a 0.2% climb in May.
NOTE: Purchase rate locks are now 82% of total market originations and are now at the lowest level since the pandemic began.
Credit scores slightly fell for the month with the average purchase score falling two points to 732, this down only one point from one year ago…
- Rate/term’s average score was down one point to 731 for the month and down three points year-over-year.
- Cash-out refis saw the biggest decline with a 7-point drop from April and are now down 33 points from May 2021.
Scott Happ, president of Optimal Blue, said that rising rates have really changed the dynamics of the mortgage business…
- “The month’s data shows a market struggling under the weight of significantly higher rates than Americans have enjoyed for the better part of the last three years…While there is volume pressure across the board due to rising rates, purchase volumes are holding up the best and are now driving 82% of all origination activity. Lenders are now more reliant on the purchase market for origination volumes than they have been in 20 years.”
NOTE: The 30-year fixed actually fell 7 basis points from April, but remains 219 basis points higher than one year ago. This was the first month-over-month decline in rates in 10 months.