Despite mortgage rates increasing in March faster than they have in 13 years, the volume of rate locks overall rose 19.1%, driven by a 31.5% spike in purchase locks from a month earlier, according to a new report.
Black Knight, the software, data, and analytics company that serves the mortgage lending, servicing, and real estate industries, today released its latest Originations Market Monitor report for March.
“Mortgage interest rates spiked in March, with 30-year offerings climbing 70 basis points over the course of the month,” said Scott Happ, president of Optimal Blue, a division of Black Knight. “In fact, our OBMMI (Optimal Blue Mortgage Market Indices) daily interest rate tracker showed the average 30-year conforming rate reach as high as 4.93% late in the month before pulling back slightly to close out March at 4.79%.
Despite, or perhaps because of, that increase, Happ said, purchase lock volume rose 31.5% from February, “likely as prospective buyers moved to lock in their loans before rates climbed any higher.”
While cash-out refinance locks remained relatively flat, rising just 1.6%, rate/term refinance activity continued to slide, with March marking the sixth consecutive monthly decline.
The continued decline in rate/term refinance locks pushed the refi share of the market down to just 28%, its lowest point since November 2018. Non-conforming loan products continued to gain market share at the expense of agency volumes, as the pace of home-price growth has reached record highs, according to the report.
Pull-through rates — the share of locks that result in funded loans — fell on both purchase and refinance locks, with refi pull-through falling to just 65.7%, the report states.
“As home prices continue to climb — even in the face of sharply rising interest rates — we’ve seen the average loan amount rise as well,” Happ said. “The average loan rose by $8,000 to just under $362,000 in March, representing a more than 23% increase over February’s rise.”
In turn, he said, “non-conforming products — including both jumbos and loans with expanded guidelines — continued to take market share from conforming loans and accounted for a full 18% of the month’s lock activity. The FHA share of lock activity also rose on strong purchase lending demand.”
Each month’s Originations Market Monitor report provides origination metrics for the U.S. and the top 20 metropolitan statistical areas by share of total origination volume, Black Knight said.
Much more detail on March’s origination activity can be found in the full Black Knight Originations Market Monitor report.
