Mortgage origination activity rose last month despite rapidly rising mortgage rates as prospective buyers sought to lock in their loans.
Overall origination activity jumped 19% in March from the previous month, led by a 31% increase in purchase loan locks, according to the monthly Originations Market Monitor report from Black Knight. While cash-out refinance activity, which has been somewhat insulated due to strengthening home values, rose a mere 1.6% in March from February, rate-term refi originations fell 15.4% during the same period.
Despite seeing the fastest one-month 30-year mortgage rate rise in nearly 13 years, an increase in purchase lock volume was “likely as prospective buyers moved to lock in their loans before rates climbed any higher,” Scott Happ, president of Black Knight’s Optimal Blue division, said in a statement.
The 30-year mortgage rate rose 70 basis points to finish March at 4.79% to mark the highest level in more than three years, according to the Optimal Blue Mortgage Market Indices daily interest rate tracker. In the face of rapidly climbing mortgage rates, refinance comprised 28% of the mortgage market last month, the lowest level since November 2018.
As home prices surged in the sellers’ market, the average loan rose by more than 23% to just under $361,000 in March from February. Home prices across the country rose 20% year-over-year in February, marking 12 months of consecutive double-digit gains, according to CoreLogic.
“In turn, non-conforming products, including both jumbos and loans with expanded guidelines, continued to take market share from conforming loans and accounted for a full 18% of the month’s lock activity,” said Happ.
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Conforming loans comprise about 61% of last month’s lock activity, a decline of 686 basis points from a year ago.
The highest rate lock volume came from the Los Angeles-Long Beach-Anaheim, California region, where 38% of the country’s refis were done last month. The New York, Newark, Jersey City region had the second highest lock volume rate at 4.3% and the Washington, Arlington, Alexandria trailed at 3.9%.