Black Knight, Inc.’s April Originations Market Monitor report showed that conforming 30-year rates, which finished the month at 5.42%, are now hovering “at or near the highest interest rates since the Great Recession,” according to Scott Happ, president of Optimal Blue, a division of Black Knight.
The report looked at mortgage origination data through April month-end using daily rate lock data from Black Knight’s Optimal Blue PPE.
Rate-lock production reflected the current rate environment with overall volumes dropping 20% from March, led by a large drop (-50%) in rate/term refinance activity. Cash-out refinance locks fell 40% from last month as homeowners got more creative with financing, including considering HELOCS, to access equity without losing current low rates.
The combined decline in refinance locks pushed the refi share of the market down to just 20% in April, the lowest point on record since at least January 2018, when Optimal Blue began tracking the metric, the report showed.
While purchase locks fell 11% from March, they remained flat on a year-over-year basis, indicating there is still consistent homebuyer demand, the data showed, while government-backed lending picked up in April as FHA and VA locks captured market share from conforming products.
“Seen in the light of such quick and sharp rises in 30-year rates, April’s declines in rate lock activity – though bracing – are hardly surprising,” Happ said. “That’s particularly true of refinance locks when half of all mortgage holders have current first lien rates below 3.5%.”