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MCT Report: Rate Locks Down

Steve Goode
Jul 11, 2022
Mortgage Capital Trading

Total mortgage rate locks by dollar volume decreased 3.8% in June; total lock volume down 32.0% from a year ago.

As home purchases decrease so do rate locks and they are down slightly month over month and year over year, according to hedging specialist MCT.

The company, which provides capital markets software and services supporting lenders with hedging and pipeline solutions, said purchase locks declined by 1.63% from May to June and 4.6% from a year ago.

Those numbers were derived from the MCTLive! Lock Volume indices for June, whose data, the company said, represents a balanced cross section of several hundred lenders among retail, correspondent, wholesale and consumer direct channels. MCT officials said  A broad-based view of the entire market provides a more accurate picture of mortgage originations versus indices that are influenced by mega lenders. 

The June MCTLive! Lock Volume Indices  is broken out by transaction type: purchase, rate/term refinance, and cash out refinance. According to the indices, total mortgage rate locks by dollar volume decreased 3.8 percent in June, and total lock volume was down 32.0 percent from a year ago as purchases continue to make up most originator volume. The increase in mortgage rates is also evident as refinance volume continues to fall. Rate/term refinances are down 12.4 percent and cash out refinances are down 18.7 percent month-over-month. From one year ago, cash out refinance volume is down 64.5 percent, while rate/term refinance volume has dropped 90.4 percent. 

Officials said that given rate/term refinance volume was already down 90 percent year-over-year in the May MCTlive! Lock Volume Indices, this month’s drop does not change the total much.

The June report also noted that loan sizes were up 8.3 percent over the past year, with the average loan amount increasing from $291k to $315k. Officials said it is important to note that MCT’s rate lock activity indices are based on actual dollar volume of locked loans, not number of applications.

 “Especially in a tight purchase market, MCT believes its methodology (using actual loans locked vs. applications) is a more reliable metric,” officials said. “There is a higher likelihood of having multiple applications per funded loan, and prequals do not convert at as high of a rate in the current market as has historically been the case – especially when applications are counted at the early stage of entering a property address.”

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