As mortgage rates rose more than 90 basis points to end September at 6.72%, overall rate foreclosure volumes fell predictably sharply – down 10% from August and nearly 60% from 2021 levels.
According Black Knightorigination market monitor report. Rate/duration lock-ins, which had fallen precipitously in recent months, edged down 0.1% from August, but were down 93.3% from September 2021.
Interest rates at 15-year highs and affordability issues have changed the mortgage origination market for the rest of the year as well as the foreseeable future, said Scott Happ, president. of Optimal Blue from Black Knight.
“Home prices are falling in a growing number of markets, but across the country affordability remains a challenge,” Happ said. “Given these realities, it’s not particularly surprising that rate locks are falling sharply,” Happ said.
The number of buy rate locks, which exclude the impact of soaring home values on dollar volume, is down more than 10% from 2019 levels, marking the third straight month the number of purchase locks fell below pre-pandemic norms, Black Knight said.
The data also shows that approximately 90% of all active first mortgages have current rates below 5%, putting the population of rate/term refinance candidates at an all-time low. As a result, the refinancing share of the market hit a new low of 16% in September.
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Presented by: Teraverde
With affordability headwinds already high and interest rates up almost a full percentage point in September, there was a weaker appetite for riskier loans – a lower credit score and programs high loan-to-value (LTV) loans.
The mortgage credit availability index, measured by the Mortgage Bankers Association, fell for seven consecutive months in September, falling 5.4% to 102.5. A decline in the MCAI, pegged at 100 in March 2012, indicates that lending standards are tightening while an increase in the index suggests an easing in credit.
“As mortgage rates have more than doubled over the past year, leading to lower refinance activity, lenders have worked to reduce excess capacity and costs by eliminating underutilized loan programs. “, Joel Kan, Associate Vice President of Economic and Sector Forecasts at the MBA.
All component indices fell in September, with most indices falling to their lowest levels in over a year.
The conventional MCAI fell 4.9%, while the government MCAI fell 5.7% to its lowest level since April 2013. Among the component indices of the conventional MCAI, the jumbo MCAI fell 5.8 % and the compliant MCAI fell by 3.6%.