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Black Knight’s January 2022 Originations Market Monitor

Purchase and Cash-Out Rate Locks Up in January on Rapid Rise in 30-Year Rates; Rate/Term Refinances Continue Freefall

Black Knight’s January 2022 Originations Market Monitor
  • Black Knight’s OBMMI daily interest rate tracker recorded a sharp rise in 30-year rates over the first weeks of 2022, which climbed over 40 basis points to finish January at 3.77%, the highest point since March 2020
  • Despite the rapid increase in interest rates, mortgage rate lock volumes picked back up in January after four consecutive monthly declines
  • A 9.5% overall increase in locks was driven by strong growth in both purchase (+19.9%) and cash-out refinance (+9.2%) origination activity
  • Rate/term refinances continued to tumble, with locks on such loans falling another 16.5% for an 80% year-over-year decline, pushing the refi share of the market to 43%, the lowest point since July 2019
  • With the rate of home price growth reaccelerating in late 2021/early 2022, non-conforming products continued to capture share and now account for 16% of the market, up from 9% this time last year
  • Likewise, upward pressure on home prices pushed the average loan amount up another $6,400 – a 60% higher increase than December’s jump and trending higher in recent months

JACKSONVILLE, Fla. – Feb. 14, 2022 – Today, Black Knight, Inc. (NYSE:BKI) announced the release of its latest Originations Market Monitor report, looking at mortgage origination data through January  month-end. Leveraging daily rate lock data from Black Knight’s Optimal Blue PPE – mortgage lending’s most widely used pricing engine – the Originations Market Monitor provides the industry’s earliest and most comprehensive view of origination activity.

“Amidst a backdrop of the Omicron variant, inflation concerns, Fed tapering and multiple rate hikes on the horizon, mortgage rates soared over the first weeks of 2022,” said Scott Happ, president, Optimal Blue, a division of Black Knight. “Our OBMMI daily interest rate tracker showed the average 30-year conforming rate at 3.77% at month’s end – the highest rates we’ve seen since March 2020, heading into the pandemic. Still, despite this increase – and in some ways, because of it – lock activity improved in January for the first time in four months. Of course, rate/term refinance activity continued to fall, but strong growth in both purchase and cash-out refi locks helped drive a nearly 10% month-over-month jump in overall lock activity.”

The month’s pipeline data showed overall rate locks up 9.5% from December, driven by 19.9% and 9.2% increases in purchase loan and cash-out locks, respectively. Continuing a long-running trend, rate/term refinance lending activity fell for the fifth consecutive month. Rate/term locks dropped another 16.5% – to the lowest level since May 2019 – marking an 80% year-over-year decline. Unsurprisingly, the refinance share of the month’s origination mix fell to 43%, the lowest percentage of the market since July 2019. Non-conforming loan products – primarily jumbo loans – continued to gain market share at the expense of agency volumes in the face of reaccelerating home price growth. All in, non-conforming loan products now account for 16% of the origination market, up from 9% this time last year.

“With some $10 trillion in homeowner tappable equity in the market, it makes sense that we’d see cash-out refinance locks on the rise,” Happ continued. “The significant jump in purchase originations can likely be attributed in part to typical pent-up, post-holiday demand. It could also represent skittish homebuyers hoping to lock in a still historically low rate being spurred to action by the quick acceleration in 30-year offerings over the opening weeks of the month. Of course, inventory constraints continue to serve as headwinds on purchase origination, as does homeowner affordability in the face of rising rates and home prices. This bears out in the increase we’ve seen in the average loan amount, which rose yet another $6,400 in January to $347,300. The rate of those increases has been on the rise and trending higher in recent months as well, with January’s rise marking a 60% higher increase than December’s jump.”

Each month’s Originations Market Monitor provides high-level origination metrics for the U.S. and the top 20 metropolitan statistical areas by share of total origination volume. Much more detail on January’s origination activity can be found in the full Black Knight Originations Market Monitor report located here.

About Black Knight

Black Knight, Inc. (NYSE:BKI) is an award-winning software, data and analytics company that drives innovation in the mortgage lending and servicing and real estate industries, as well as the capital and secondary markets. Businesses leverage our robust, integrated solutions across the entire homeownership life cycle to help retain existing customers, gain new customers, mitigate risk and operate more effectively.

Our clients rely on our proven, comprehensive, scalable products and our unwavering commitment to delivering superior client support to achieve their strategic goals and better serving their customers. For more information on Black Knight, please visit www.blackknightinc.com.

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