While mortgage rate-lock volumes increased nationwide for the first time in nine months, volumes remained down compared to 2022.
According to data from Black Knight Inc., a mortgage technology and data provider, January’s mortgage pipeline saw the dollar volume for rate locks go up 32 percent compared to December, driven in part by January’s lower mortgage rates. Purchase rate-lock volumes also went up 32 percent nationwide month-over-month.
“Mortgage rates declined in January, continuing a trend that began in early November 2022” when rates hit a decade high of 7.08 percent according to Freddie Mac, Kevin McMahon, president of Optimal Blue, a division of Black Knight, said in the statement. “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.”
In the metropolitan statistical area that includes Greater Boston, lock volumes increased by 10.7 percent from December, according to Black Knight. The 20 MSAs with the largest lock volumes all had double-digit growth in January. Month-over-month volumes in three MSAs – Chicago, Nashville and Charlotte – went up by more than 50 percent from December.
“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 said. “Mortgage originations continue to face significant rate, affordability and inventory headwinds, and lock volumes are still down more than 60 percent 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.”
Average rates on 30-year fixed-rate mortgages in January 2023 were above 6 percent, while they were in the mid-3 percent range in January 2022.
Overall lock volumes were down 61.9 percent nationwide compared to January 2022, and purchase lock volumes were down 43.7 percent. Greater Boston’s rate-lock volumes were down 54 percent year-over-year for purchase loans, and the number of purchase rate-locks in Greater Boston declined by 50 percent year-over-year.
While refinance activity increased compared to December, volumes remained as much as 90 percent or more below levels from January 2022. Refinance rate-lock volumes were up 37 percent nationwide compared to December for a new rate or term and up 25 percent for cash-outs. But compared to January 2022, rate-lock volumes for refinances to a new rate or term were down 89 percent, and for cash-out refinances, rate-lock volumes were down 95 percent. Greater Boston saw rate-lock volumes drop year-over-year by 91 percent for cash-out refinances and 94 percent for refinances to a new rate or term.
