Origination activity picks up again

Updated figures show a rise in overall rate-lock volumes

Origination activity picks up again

After two straight months of declines, origination activity picked back up in June, with a 6% month-over-month gain in purchase locks and a 10% jump in cash-out refinance locks.

Overall rate lock volume was up 4%, according to Black Knight’s latest Originations Market Monitor report. However, while cash-out activity remained strong – making up 42% of refinances and 18% of total locks – locks on rate/term refis continued to drop (-4%). Meanwhile, the uptick in purchase locks was due to the three additional business days in June.

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“After an initial rise following the Fed’s policy meeting in mid-June, Black Knight’s OBMMI daily interest rate tracker shows rate offerings settling in the second half of the month and now sitting roughly equivalent to where they were at the same time in May,” said Scott Happ, president of Black Knight Secondary Marketing Technologies. “Following two consecutive months of declines – and during the typical seasonal peak for purchase lending, no less – overall locks climbed in June. Both purchase and cash-out refinances were up, but refis in which the homeowner improves their rate or term continued their downward slide, despite rates returning to levels last seen in early March. Such rate/term refis are now down 30% from that point and 60% since January.”

Driven by accelerating home price growth, the market share of jumbo lending continued to increase at the expense of conforming loan products, which is down nearly 750 basis points from last year.

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“A recent Black Knight analysis found that borrower behavior and market make-up is changing in the face of continued, record-breaking home price appreciation,” Happ said. “This tracks with the continued, growing jumbo share of lending in the market and the decline in the conforming share a result. Indeed, the conforming share of lending is down nearly 750 basis points from last year. With rates holding steady and purchase lending strong, additional growth in home prices may extend this trend further.”