Rate lock volumes fell across the board in September as interest rates rose throughout much of the month, according to Black Knight’s September 2021 Originations Market Monitor report. The report looks at last month’s mortgage lending activity, leveraging daily rate lock data from Black Knight’s Optimal Blue PPE.

Rates rose throughout much of September, with Black Knight’s OBMMI daily interest rate tracker showing September’s month-end conforming 30-year rate at 3.20%, 16BPS higher than at the start of the month. As a result, overall rate lock volume dropped 10% from August.

“We’ve noted the ‘psychological threshold’ of sub-3% rates in the past, with movement below that line triggering increased lending activity,” said Scott Happ, president of Black Knight’s Secondary Marketing Technologies. “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.”

For the moment, both purchase and cash-out refinance locks saw roughly equal 6% declines in September, but the primary driver of the month’s drop was the continued tumbling of rate/term refi volume, which was down 18.7% from August and is currently ~60% off last September’s level.

The drops in rate/term and, to a lesser degree, cash-out refinance activity drove the refinance share of the market mix back down below 50%, after breaking above that threshold last month for the first time since February.

Only nonconforming (jumbos, etc.) & FHA loans saw gains in market share in August, while all other products lost ground.

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