September 2021 Originations Market Monitor
Rate Lock Volume Falls 10% in September as Interest Rates Rise; Rate/Term Refinance Locks Drop Another 19%
- Rate lock volumes fell across the board in September as interest rates rose throughout much of the month
- Black Knight’s OBMMI daily interest rate tracker showed September’s month-end conforming 30-year rate at 3.20%, 16 basis points higher than at the start of the month
- Purchase loan and cash-out refinance locks saw nearly identical 6% declines, while rate/term refinance lending continued to tumble, dropping 18.7% from August and down nearly 60% year-over-year
- Declines in both rate/term and cash-out refinance activity drove the refinance share of the market back down below 50% after breaking that threshold last month for the first time since February
- The overall average credit score remained static in September, though declines in scores on both cash-out and rate/term refis could indicate higher-credit borrowers starting to exit the market as rates rise
- Both non-conforming and FHA loan products gained market share in August, while all other products lost ground
JACKSONVILLE, Fla. – Oct. 11, 2021 – Today, Black Knight, Inc. (NYSE:BKI) announced the release of its latest Originations Market Monitor report, looking at mortgage origination data through September 2021 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.
“According to our OBMMI daily interest rate tracker, interest rates rose throughout much of September, with the average conforming 30-year offering climbing 16 basis points to hit 3.2% by month’s end,” said Black Knight Secondary Marketing Technologies President Scott Happ. “Climbing rates drove down rate lock volumes across the board in September, but the largest decline was seen – once again – in locks on rate/term refinance loans. That said, we did see pull-through rates trend higher on both purchase and refi loans, with refi pull-through seeing a sizeable uptick, likely also a result of that same rising rate environment.”
The month’s pipeline data showed that overall rate locks were down 9.7% from August, driven by an 18.7% drop in rate/term origination activity. The month’s decline puts rate/term refinance lending down 57.2% year-over-year and drove the overall refinance share of the market mix back down below 50%. Locks on both cash-out refinance and purchase loans fell 6% in September, though the former are still up 21% over the last three months. Overall average credit scores remained static in September, though declines in scores on both cash-out and rate/term refinance loans could indicate higher credit borrowers starting to exit the market as rates rise. Both non-conforming and FHA/VA loan products gained market share in August, while all other products lost ground.
“We’ve noted the ‘psychological threshold’ of sub-3% rates in the past, with movement below that line triggering increased lending activity,” Happ continued. “What we’re seeing now represents the other side of that coin in a certain sense. It remains to be seen how much higher rates will climb – and how quickly – and in turn, how borrowers will react. It will also be important to see how and to what degree historic equity stakes and modest increases to for-sale inventory will impact cash-out and purchase lending in the coming months.”
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.
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