As mortgage interest levels crept back up in August after retreating the prior month, rate lock volume dipped to a four-year low.
Total lock volumes were down 8.9% from July, led by way of a 13.9% decline in rate/term refinance locks, in accordance with Black Knights originations market monitor report. Rate/term refi locks dropped 94.5% year over year.
Cash-out refi locks fell by 8.9% from July and declined by 72.2% from exactly the same period in 2021. As the purchase share of the marketplace remained exactly the same from July at 82%, volume fell by 14.3% from the prior month.
Mortgage originators continue steadily to feel the ramifications of interest and affordability challenges, said Scott Happ, president of Optimal Blue, a division of Black Knight. Facing headwinds of higher rates and a transfer to the traditionally slower purchasing months, rate lock volumes fell nearly 9% overall in August with their lowest level since December 2019, he said.
The purchase lock count, which excludes the impact of soaring home values on volume, is down 30% from 2021 and off 16% from 2019, marking the next consecutive month the amount of purchase locks fell below pre-pandemic levels.
Prior to the Federal Reserves anticipated rate hike later this month, the 30-year conforming fixed-rate mortgage rates have already been trending upward, closing out August at 5.8%, in accordance with Black Knights Optimal Blue OBMMI pricing engine.
The Fed is widely likely to raise interest levels for the fifth time following Federal Open Market Committee (FOMC) meeting on Sept. 20 and 21, predicated on comments by Chairman Jerome Powell.
History cautions strongly against prematurely loosening policy, Powell said at the Cato Institute on Thursday, the final scheduled public appearance prior to the Feds meeting. I could assure you that my colleagues and I are strongly focused on this project and we’ll stay with it before job is performed.
Rising interest levels continue steadily to have profound effects on home affordability, which returned to near 35-year lows to summarize the month, Happ said. While home prices saw the largest single-month decline since January 2011 at 0.77% in July from the prior month, when compared to same period this past year, home prices rose 14.5%, in accordance with Black Knights separate report.
The common price among homes being financed fell by almost $12,000 in August and is currently down by a lot more than a lot more than $43,000 since March. The common loan amount dropped $4,000 to $340,000 in August, marking the fifth consecutive decline as home prices fell month over month for the very first time in 3 years.