December 2021 Originations Market Monitor

Rate Lock Activity Falls for Fourth Consecutive Month; Rate/Term Refis Fall to Lowest Level in Two Years

December marked the fourth consecutive monthly decline in origination activity, with rate locks down 35% year-over-year in response to both higher rates and a seasonal slowdown in home purchases
Lock volumes fell across the board, driven by a 22.5% drop in rate locks on purchase loans and rate/term refinances falling another 17.1% to finish 2021 at their lowest point in two years
While locks on cash-out refinance loans also fell (-10%), they are still up nearly 18% from last year as the product remains somewhat insulated by borrowers taking advantage of soaring home equity levels
The refinance share rose to 48% on the decline in purchase locks, with average refi credit scores down 20 points from last year, as higher credit borrowers tend to wait out rising rate environment
Black Knight’s OBMMI daily interest rate tracker reflected the market reaction to the Fed’s accelerated tapering amid inflation concerns, with 30-year rates finishing the year near 2021’s highpoint of 3.37%

JACKSONVILLE, Fla. – Jan. 10, 2022 – Today, Black Knight, Inc. (NYSE:BKI) announced the release of its latest Originations Market Monitor report, looking at mortgage origination data through December month-end. Leveraging daily rate lock data from Black Knight’s Optimal Blue PPE – mortgage lending’s most widely used pricing engine – the Originations Market Monitor provides the industry’s earliest and most comprehensive view of origination activity.

“With the Federal Reserve speeding the tapering of its bond buying and indicating multiple rate hikes in 2022 to curb inflation, 30-year conforming rates sat above 3.3% for much of December,” said Scott Happ, president, Black Knight Secondary Marketing Technologies. “Indeed, our OBMMI daily interest rate tracker showed average rates at year’s end within just two basis points of the 2021 high of 3.37%. Likely in response to those rising rates – and the seasonal slowdown in home purchases – we saw locks decline across all product types in December, with total volume down 35% year-over-year.”

The month’s pipeline data showed overall rate locks down 18.3% from November, driven by a 22.5% drop in purchase loan locks. Despite the decline, purchase locks were up marginally on a year-over-year basis. Rate/term refinance lending activity continued to tumble, falling another 17% to hit the lowest level for such lending in two years. The drop in purchase lock volume increased the refinance share of the market to 48%, though it also coincided with average refinance credit scores that were 20 points lower than this time last year. This is not unfamiliar behavior as higher-credit borrowers tend to sit out rising rate environments, which brings down the overall average. Non-conforming loan products continued to gain market share at the expense of agency volumes in December as the average loan amount rose another $4,000 to finish the year at $341,000.

“Seen in the light of the normal seasonal slowdown in home sales as well as our current rate environment, December’s more than 20% drop in purchase loan locks isn’t all that surprising,” Happ continued. “Neither was the continued decline in rate/term refinance lending, though the size of the annual decline is noteworthy, if not sobering. While cash-out refi locks were also down for the month, they’re still up nearly 18% from the same month last year as the product remains somewhat insulated by borrowers taking advantage of soaring home equity levels.”

Each month’s Originations Market Monitor provides high-level origination metrics for the U.S. and the top 20 metropolitan statistical areas by share of total origination volume.

About Black Knight
Black Knight, Inc. (NYSE:BKI) is an award-winning software, data and analytics company that drives innovation in the mortgage lending and servicing and real estate industries, as well as the capital and secondary markets. Businesses leverage our robust, integrated solutions across the entire homeownership life cycle to help retain existing customers, gain new customers, mitigate risk and operate more effectively.

Our clients rely on our proven, comprehensive, scalable products and our unwavering commitment to delivering superior client support to achieve their strategic goals and better serve their customers. For more information on Black Knight, please visit www.blackknightinc.com.