Black Knight: Rate lock activity finally turns corner in January

With interest rates trending down, the dollar volume of mortgage rate locks grew by 32% from December to January, finally reversing nine consecutive months of decreasing activity.

That’s according to the newest Originations Market Monitor report from Black Knight, which showed that dollar volumes rose for purchase loan locks (which were up 32%), rate-and-term refinance locks (37%) and cash-out refi locks (25%) during the month. On a geographic basis, the 20 largest metro areas by lock volume all saw double-digit growth month over month. Chicago, Nashville and Charlotte led the way, each posting monthly gains of at least 50%.

“Mortgage rates declined in January, continuing a trend that began in early November 2022,” said Kevin McMahon, president of Optimal Blue, a division of Black Knight. “Conforming rates dropped 36 basis points from where they were at the start of the year, and we saw that rates associated with those FHA/VA/jumbo locks all came down in kind.

“Triggered by this pullback, rate lock volumes rose for the first time since March 2022, driven by declining interest rates and seasonal tailwinds, snapping a nine-month streak of declines.”

Combined, rate-and-term refis and cash-out loans comprised 15% of January’s lock volume. That is still a historically low amount of refinance activity, which illustrates the continued challenges facing the refi market in the current lending environment. McMahon was swift to point out that while January’s gain is encouraging, it may not yet be indicative of a greater trend.

“While this month’s Originations Market Monitor certainly brings welcome news, it’s important to remember that we would have expected to see a seasonal rebound in January regardless,” McMahon cautioned. “Mortgage originations continue to face significant rate, affordability and inventory headwinds, and lock volumes are still down more than 60% from the comparable period last year. With rates picking back up in early February, it will be interesting to see whether the rebound in lock activity will hold.”


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