Key Takeaways:
– Mortgage rate lock volume remained flat in October.
– Both purchase and refinance volumes decreased due to high mortgage rates.
– Rate-lock-dollar volume increased slightly but fell when adjusted for an extra business day.
– Purchase-dollar volume rose slightly but decreased after adjustment, while refinance-dollar volume declined.
– Purchase lock counts fell significantly compared to previous years.
– FHA production increased and now has the highest market share since 2017.
– Mortgage rates increased in October, with the 30-year conforming rate peaking at 7.83%.
– Jumbo mortgage rates climbed above 8%.
– More borrowers turned to adjustable-rate mortgages (ARMs) due to high mortgage rates.
– The average loan amount and purchase price decreased slightly in October.
– Certain markets, such as Austin and Tampa, saw month-over-month growth in mortgage rate lock volume.
HousingWire:
Affordability headwinds continued in the mortgage industry with mortgage rate lock volume remaining virtually flat in October. Both purchase and refinance volumes continued to wane in the face of the highest mortgage rates in over two decades, according to Optimal Blue’s originations market monitor report.
Rate-lock-dollar volume was also flat in October, ticking up 0.5% month over month. However, when adjusting for the extra business day, volume fell 4%.
Purchase-dollar volume rose 1% but slumped 3% after the same adjustment. Refinance-dollar volume declined, with cash-outs falling 3% and rate-and-term refinances down 6%.
Purchase lock counts – which exclude the impact of rising/falling home prices – fell 23% year over year and 43% from pre-pandemic levels in 2019. The refinance share of lock volume remained at current-cycle lows of 12%.
“In October, we saw conventional, conforming volume fall to its lowest point since March, dropping to 56% of the total lock production,” said Brennan O’Connell, data solutions manager at Optimal Blue.
“The lost market share was primarily picked up by FHA production, which rose to 22% of total volume. FHA market share is now at the highest level seen since 2017. Non-agency and VA production finished October at 11.5% and 10.3%, respectively,” O’Connell added.
According to Optimal Blue’s mortgage market indices (OBMMI), the 30-year conforming rate peaked at 7.83% in October before clawing back to 7.78%, climbing 37 basis points (bps) from the end of September, the report showed.
“The mortgage rate spread to Treasuries also grew in October as investors sought safe-haven assets amongst geopolitical concerns in Europe and the Middle East. The spread widened by 8 basis points to finish the month at 290 basis points,” O’Connell said.
Jumbo mortgage rates climbed above 8% before finishing the month at 7.94%, up 35 bps month over month. FHA and VA loan rates rose 26 bps and 40 bps, respectively, both finishing the month at 7.4%.
The steep surge in mortgage rates pushed more borrowers toward adjustable-rate mortgages (ARMs) in October, with the share of adjustable-rate locks rising to 7.9%, up from 6.8% in September.
The average loan amount dropped slightly to $352,500 in October from $353,200 the month prior, and the average purchase price fell to $449,000.
Although production trended lower nationally, certain warmer or more temperate markets saw month-over-month growth due to less seasonality in those climates, the report noted.
The Austin-Round Rock, Texas and Tampa-St. Petersburg-Clearwater, Florida metropolitan statistical areas (MSAs) both showed double-digit, month-over-month growth in mortgage rate lock volume in October.
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Property Chomp’s Take:
In the mortgage industry, the affordability headwinds continued to affect homebuyers in October. According to Optimal Blue’s originations market monitor report, mortgage rate lock volume remained virtually flat during this period. Both purchase and refinance volumes also continued to decline, primarily due to the highest mortgage rates seen in over two decades.
While rate-lock-dollar volume increased slightly by 0.5% month over month, it actually fell by 4% when adjusting for the extra business day. Purchase-dollar volume saw a slight rise of 1%, but after adjusting for the same factor, it experienced a 3% decline. Refinance-dollar volume decreased, with cash-outs falling by 3% and rate-and-term refinances down by 6%.
Looking at the purchase lock counts, which exclude the impact of rising or falling home prices, there was a significant drop of 23% compared to the previous year and a staggering 43% decline from pre-pandemic levels in 2019. Additionally, the refinance share of lock volume remained at current-cycle lows of 12%.
Brennan O’Connell, data solutions manager at Optimal Blue, noted that in October, conventional, conforming volume reached its lowest point since March, accounting for only 56% of the total lock production. The market share that was lost by conventional, conforming volume was primarily picked up by FHA production, which rose to 22% of the total volume. FHA market share is now at its highest level since 2017. Non-agency and VA production finished October at 11.5% and 10.3%, respectively.
According to Optimal Blue’s mortgage market indices (OBMMI), the 30-year conforming rate reached its peak at 7.83% in October before settling at 7.78%. This represented a 37 basis points increase from the end of September. O’Connell also mentioned that the mortgage rate spread to Treasuries grew in October as investors sought safe-haven assets amidst geopolitical concerns in Europe and the Middle East. The spread widened by 8 basis points, ending the month at 290 basis points.
Jumbo mortgage rates climbed above 8% before finishing the month at 7.94%, marking a 35 basis points increase. On the other hand, FHA and VA loan rates rose by 26 and 40 basis points, respectively, both reaching 7.4% by the end of October.
The surge in mortgage rates led more borrowers to consider adjustable-rate mortgages (ARMs) in October. The share of adjustable-rate locks rose to 7.9%, up from 6.8% in September.
The average loan amount experienced a slight drop from $353,200 in September to $352,500 in October. The average purchase price also decreased to $449,000.
Although national production trended lower, certain markets with warmer or more temperate climates saw month-over-month growth due to less seasonality. The Austin-Round Rock, Texas and Tampa-St. Petersburg-Clearwater, Florida metropolitan statistical areas (MSAs) were notable examples, showing double-digit growth in mortgage rate lock volume in October.
In conclusion, the mortgage industry faced continued affordability challenges in October, with mortgage rate lock volume remaining flat. Purchase and refinance volumes declined, largely due to the highest mortgage rates seen in over two decades. However, certain markets experienced growth, indicating regional variations in the industry. The use of the
