September 27, 2023
Rate lock volume declines in lowest affordable housing market in 40 years

Rate lock volume fell 1.5% in August, the third consecutive decline as mortgage rates reached their highest level in more than 20 years.

Overall lock volume has declined by 9.5% over the past three months and is 55% less than in August 2022. black KnightAugust Genesis Market Monitor Report.

“Interestingly, we saw very modest increases in both cash-outs and rate/term refinance locks in August,” Andy Walden, Black Knight’s vice president of enterprise research, said in a statement. “Most of what the data is showing us is that there is still very little activity happening among first-lien holders with older mortgages or particularly low balances, for whom today’s rates have become less of an issue. ”

Rate/term refis declined by 13.5% over the three-month period and by 18.6% from the same period last year.

Buying locks – which were down 1.9% from July and down nearly 20% year over year – continued to make up 88% of all lock activity.

August was another tough month for mortgage borrowers from an interest rate perspective.

The 30-year mortgage rate climbed to nearly 7.3% and reached its highest level in more than 20 years before reaching 7.07% at the end of the month.

Demand for adjustable rate mortgage (ARM) loans fell to 6.56% of total locks as jumbo rates ended the month at 7.46%.

“The current housing market dynamics are putting pressure on mortgage demand. Rates dropped by the end of August, but potential homebuyers are still facing the least affordable housing market in nearly 40 years,” Walden said.

The average loan amount fell by $6,000 to $352,000 in August, while the average purchase price on locked loans dropped to $450,000.

Average credit scores among primary residence purchases locked in fell slightly for the first time since November 2022, but remain near all-time high

The credit quality of conforming and FHA borrowers remains strong, but scores appear to be stable.

The average score for conforming loans decreased 1 point to 753, while FHA increased 2 points to 671 and VA remained steady at 712.


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