Overall, rate locks were down 5.9% in October compared to the previous month, also seeing a 23.3% month-over-month decrease in rate/term origination activity. The latest data from Black Knight, Inc.’s Originations Market Monitor report shows rate/term refis are also down, decreasing 62.5% YoY and resulting in the overall refinance share of the market mix falling to 45%—the lowest since June 2021.
Rate locks on both cash-out refinance (-0.3%) and purchase loans (+0.4%), however, held firm for the month. While there was a slight dip in October, cash-out lock volumes are still up nearly 33% YoY.
“The ongoing decline in rate/term refinance locks picked up pace in October as 30-year rates continue to rise,” said Black Knight Secondary Marketing Technologies President Scott Happ in a statement. “In fact, locks on rate/term refinance loans were down by more than 23% since last month and are now almost 63% off where they were this time last year. Back then, 30-year rate offerings hovered in the 2.8-2.9% range, whereas our OBMMI daily interest rate tracker showed October’s month-end conforming 30-year rate at 3.27%. Jumbo offerings, on the other hand, have risen more slowly over the past three months and ended October nearly 10 basis points below conforming rates.”
“As Black Knight noted in our most recent Mortgage Monitor report, the dynamics of the refinance market are changing, with a sharp shift away from rate/term refis to cash-out lending,” Happ added. “This shift tends to happen in any rising rate environment, never mind one in which American mortgage holders have more than $9 trillion in tappable equity available to them. While we did see cash-out locks tick down in October, the overall trend toward an equity-centric refi market remains strong and one we will continue to watch closely in the coming months.”