August rate-lock data reveals steep drop in mortgage lending

Mortgage rate-lock data from Black Knight showed that lending activity saw a steep downturn last month, with locks retreating to their lowest level in more than two years.

August rate-lock activity, measured by dollar volume, was down 8.9% from July as the market continued to feel the withering effects of rising mortgage rates and high home prices that are cooling demand. Purchase loan locks, which comprised 82% of all activity for the month, were down 8.7% annually. With the average mortgage rate rising to 5.8% at the end of August, refinances continued to suffer. Rate-and-term refis were down 13.9% while cash-out refis were down 8.9% month over month.

Rate-and-term refi locks are now down 94.5% since August 2021 while cash-out activity on a year-to-date basis is down 72.2% annually. The refi share of the market remained at 18%, the lowest figure on record since Black Knight began tracking in 2018.

“Mortgage originators continue to feel the effects of interest rate and affordability challenges,” said Scott Happ, president of Black Knight division Optimal Blue. “Facing headwinds of higher rates and a move into the traditionally slower purchasing months, rate lock volumes fell nearly 9% overall in August to their lowest level since December 2019.

“[Year-to-date] purchase lock counts, which exclude the impact of soaring home values on volume, are off 30% from last year,” Happ said. “That count is now down more than 16% from 2019, marking the second consecutive month the number of purchase locks have fallen below pre-pandemic levels, as well as the lowest August count in more than four years.”

While home prices remain high, weakened demand and the resulting decrease in competition has started to take a toll on prices. The average purchase price among homes being financed dropped by nearly $12,000 in August, a monthly decline of 2.7%. The purchase price of financed homes has now fallen by more than $43,000 (9.2%) since March.

The average loan size shed $4,000 in August, a fifth straight monthly decrease that brought the average loan amount to $340,000.


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