October 2023 Originations Market Monitor
Optimal Blue Originations Market Monitor: Rate Headwinds Continue in October, Lock Volume Remains Flat With Production Growing in Select Geographies
Optimal Blue released its October Originations Market Monitor, with data showing rates increasing 26 to 40 basis points month over month across various mortgage types. Rate lock volume in October was virtually flat compared to September; however, when adjusting for the extra business day, volume was down 4%. Both purchase and refinance volumes continued to wane amid multi-decade rate highs. Conventional conforming volume fell to its lowest share of rate lock volume since March, while the FHA share hit its highest point since 2017. Although production trended lower nationally, certain warmer or more temperate geographies, which are generally less susceptible to seasonality in purchase activity, saw month-over-month growth. Both average loan amounts and purchase prices fell, while credit scores rose. Access the full report.
PLANO, Texas – Nov. 13, 2023 – Today, Optimal Blue announced the release of its Originations Market Monitor report, looking at mortgage origination data through October 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.
The Optimal Blue Mortgage Market Indices (OBMMI) 30-year conforming rate peaked at 7.83% in October before clawing back to 7.78%, a 37-basis-point increase over September month-end. Jumbo rates climbed above 8% before finishing the month at 7.94%, up 35 basis points month over month. FHA and VA rates rose 26 basis points and 40 basis points, respectively, both finishing the month at 7.4%. The steep mortgage rate increase pushed more borrowers toward adjustable-rate mortgage (ARM) loans in October, with the share of adjustable-rate locks rising to 7.9% from 6.8% in September.
“Despite the Federal Open Market Committee’s decision to pause rate hikes, we saw rate headwinds continue in October,” said Brennan O’Connell, data solutions manager, Optimal Blue. “The mortgage rate spread to Treasurys also grew in October as investors sought safe haven assets amongst geopolitical concerns in Europe and the Middle East. The spread widened by 8 basis points to finish the month at 290 basis points.”
Rate lock dollar volume was flat in October, ticking up 0.5% month over month. However, when adjusting for the extra business day, volume was down 4%. Purchase dollar volume rose 1%, but was down 3% after the same adjustment. Refinance dollar volume continued to wane in the face of multi-decade highs for rates, with cash-outs falling 3% and rate/term refinances dropping 6%.
Purchase lock counts – which exclude the impact of rising/falling home prices and, as such, better represent housing activity – were down 23% year over year, and down 43% from pre-pandemic levels in 2019. The refinance share of lock volume remained at current cycle lows of 12%.
“In October, we saw conventional conforming volume fall to its lowest point since March, dropping to 56% of total lock production,” O’Connell continued. “The lost market share was primarily picked up by FHA production, which rose to 22% of total volume. FHA market share is now at the highest level seen since 2017. Non-agency and VA production finished October at 11.5% and 10.3%, respectively.”
Although production continued to trend lower nationally, certain geographies experienced strong month-over-month growth in October. The Austin-Round Rock, Texas and Tampa-St. Petersburg-Clearwater, Florida metropolitan statistical areas (MSAs) both showed double-digit growth in lock volume from September. Approximately half of the top 20 MSAs by volume showed lock production growth in October. This can generally be attributed to less seasonality in warmer and temperate climates.
The average loan amount fell from $353.2K to $352.5K in October, while the average purchase price fell to $449K. Credit scores rose slightly across agency production in October, with average credit scores for GSE-eligible locks ticking up 1 point, FHA locks up 2 points, and VA locks up 4 points.
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 Optimal Blue Originations Market Monitor for more detail on October’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.
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