September 2023 Originations Market Monitor

Optimal Blue Originations Market Monitor: Locks Decline in September Due to Seasonal Purchase Declines, Rates Hit Multi-Decade Highs

PLANO, Texas – Oct. 12, 2023 – Today, Optimal Blue announced the release of its Originations Market Monitor report, looking at mortgage origination data through September 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.

“September brought a 20% decline in rate lock volumes as a result of headwinds from a seasonal decline in purchase activity and rising interest rates, continuing a four-month trend of declining volumes,” said Scott Smith, interim CEO, Optimal Blue. “The refi share of total lock volume ticked slightly higher from 12% to 13%, primarily as a result of seasonal purchase declines. Cash-out volumes continue to be the lion’s share of refis at roughly double that of rate/term volumes, with virtually no mortgages in the money to refinance.”

September’s lock decline continues a four-month trend of declining volumes, with purchase locks down 20%, cash-outs down 17%, and rate/term refis down 18% from August. Total volumes were down 33% from the same time last year. Additionally, purchase lock counts – which exclude the impact of rising home prices – were down 32% year over year, and 39% from pre-pandemic levels in 2019.

Conforming loans gave up share in September to all other product types. While still making up the majority of production at 57%, conforming volumes are trending well below pandemic levels and have returned to the mid-50–60% range seen in 2018 and 2019. FHA and VA production both gained share, rising to 20.6% and 10.4%, respectively. The lock production share of nonconforming loans – including both jumbo and expanded guidelines – grew as well in September to 11.1% of the total.

“As the market reacted to the Fed’s ‘higher for longer’ message, we saw mortgage rates pushed to multi-decade highs in September,” Smith continued. “We also continue to see average credit scores remaining high, suggesting tight credit availability and a relatively small cohort of buyers who can make a purchase in this historically unaffordable environment.”

The Optimal Blue Mortgage Market Indices 30-year conforming rate rose 33 basis points during the month to close at 7.41%, with FHA at 7.18%, VA at 7.00%, and jumbo loans up to 7.60%. Rates are now roughly a quarter point higher than the highs in fall 2022. The 30-year conforming rate spread to the 10-year Treasury narrowed 17 basis points, with the 10-year finishing September at approximately 4.6% – nearly 40 basis points above the highs set last fall.

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. View the Optimal Blue Originations Market Monitor report for more detail on September’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