November 2023 Originations Market Monitor
Optimal Blue Originations Market Monitor: November Brings Long-Awaited Shift in Direction for Mortgage Rates, Significant Decline in Average Purchase Price, and Uptick in Rate/Term Refinance Production
Summary:
Optimal Blue released its November Originations Market Monitor, with data showing a 10% drop in lock volume month over month. Overall lock volume was characterized by a 12% drop in purchase locks and a 2% increase in refinance locks. Rate/term refinance volume showed 10% month-over-month growth, while cash-out volume remained flat. The Optimal Blue Mortgage Market Indices (OBMMI) 30-year conforming rate dropped 67 bps in November, finishing the month at 7.11%. The spread between the OBMMI 30-year conforming rate and the 10-year Treasury narrowed by 16 bps to 274 bps – the lowest level since March. Nonconforming products gave up share in November, dropping to 10% of total production, with FHA products lifting to 23% of total production. The average home price dropped significantly, from $449.3K to $438.3K, possibly signaling a trend in falling prices. Access the full report.
PLANO, Texas – Dec. 12, 2023 – Today, Optimal Blue announced the release of its Originations Market Monitor report, looking at mortgage origination data through November month-end. Leveraging daily rate lock data from the Optimal Blue PPE – the industry’s most widely used product, pricing, and eligibility engine – the Originations Market Monitor provides a comprehensive and timely view into origination activity.
“November saw a welcomed reversal in the upward trend in mortgage rates that began in April,” said Brennan O’Connell, data solutions manager, Optimal Blue. “Yet despite the improving rate environment, lock volume was down 10% month over month, driven by a 12% drop in purchase locks as the market enters the slowest buying months of the year. However, many borrowers who took out loans over the last few months are finding themselves in the money for refinances, which drove refinance volume up 2% month over month to reach its highest level since February.”
This refinance climb included 10% month-over-month growth in rate/term refinance volume, while cash-out volume remained essentially flat from October. Purchase lock counts, which exclude the impact of changes in home prices, were down 13% year over year and 37% from pre-pandemic levels in 2019.
The Optimal Blue Mortgage Market Indices (OBMMI) 30-year conforming rate dropped 67 basis points (bps) in November, finishing the month at 7.11%. Jumbo rates fell 34 bps to 7.61%, FHA dropped 54 bps to 6.90%, and VA dropped 61 bps to 6.79%.
“Cooling economic indicators and dovish commentary from the Federal Open Market Committee meeting at the beginning of November drove a rally in rates across mortgage products,” O’Connell continued. “This rally narrowed the spread between the OBMMI 30-year conforming rate and the 10-year Treasury by 16 bps, pushing it down to 274 bps – the lowest level since March.”
Nonconforming products – including jumbo and expanded guidelines loans – gave up share in November, dropping from 12% to 10% of total production month over month. FHA products lifted from 22% to 23% of total production month over month. Other products remained mostly flat in production, including GSE-eligible products at 56%, VA products at 10%, and USDA products at 1%. The rise in FHA share sets another recent high for the government-insured product. The steep drop in rates shifted production, pushing ARM share down to 6.5% from 7.9% last month.
Most metropolitan statistical areas (MSAs) experienced declines in rate lock volume, with the exception of Orlando, which saw growth in production, and New York and San Antonio, which both remained flat in month-over-month volume.
The average credit score for rate/term refinances dropped 7 points in November, as did average scores for purchase and cash-out refinances, which fell by 1 and 2 points, respectively. The average loan amount dropped from $352.5K to $347.4K, and the average purchase price saw the largest decline since October 2022, falling from $449.3K to $438.3K.
“Historic affordability issues are keeping buyers on the sideline and forcing sellers to reduce their expectations,” O’Connell added. “This may signal a downward trend in home prices after an extended period of steady growth.”
Each month’s Originations Market Monitor provides high-level origination metrics for the U.S. and the top 20 MSAs by share of total origination volume. View the Optimal Blue Originations Market Monitor report for more detail on November’s activity.
Nothing herein shall be construed as, nor is Optimal Blue providing, any legal, trading, hedging, or financial advice.
About Optimal Blue
Optimal Blue is the market leader in mortgage secondary marketing technology. The company facilitates transactions among mortgage market participants through its Marketplace Platform, actionable data, and technology vendor connections. The platform supports a range of functions for originators and investors to automate and optimize core processes related to product, pricing, and eligibility, hedge analytics, MSR valuation, loan trading, social media compliance, and counterparty oversight. The company’s premier product, pricing and eligibility engine – the Optimal Blue PPE – is used by 64% of the top 500 mortgage lenders in the U.S. For more information on Optimal Blue’s end-to-end secondary marketing automation, visit OptimalBlue.com.
# # #
Media contact:
Olivia DeLancey
904.854.5459
Olivia.DeLancey@OptimalBlue.com
 |
Download Report |