September’s lock decline continues a four-month trend of declining volumes, with purchase locks down 20%, cash-outs down 17%, and rate/term refis down 18% from August. Total volumes were down 33% from the same time last year. Additionally, purchase lock counts – which exclude the impact of rising home prices – were down 32% year over year, and 39% from pre-pandemic levels in 2019.
Conforming loans gave up share in September to all other product types. While still making up the majority of production at 57%, conforming volumes are trending well below pandemic levels and have returned to the mid-50–60% range seen in 2018 and 2019. FHA and VA production both gained share, rising to 20.6% and 10.4%, respectively. The lock production share of nonconforming loans – including both jumbo and expanded guidelines – grew as well in September to 11.1% of the total.
“As the market reacted to the Fed’s ‘higher for longer’ message, we saw mortgage rates pushed to multi-decade highs in September,” Smith continued. “We also continue to see average credit scores remaining high, suggesting tight credit availability and a relatively small cohort of buyers who can make a purchase in this historically unaffordable environment.”
The Optimal Blue Mortgage Market Indices 30-year conforming rate rose 33 basis points during the month to close at 7.41%, with FHA at 7.18%, VA at 7.00%, and jumbo loans up to 7.60%. Rates are now roughly a quarter point higher than the highs in fall 2022. The 30-year conforming rate spread to the 10-year Treasury narrowed 17 basis points, with the 10-year finishing September at approximately 4.6% – nearly 40 basis points above the highs set last fall.
Each month’s Originations Market Monitor provides high-level origination metrics for the U.S. and the top 20 metropolitan statistical areas by share of total origination volume. View the Optimal Blue Originations Market Monitor report for more detail on September’s activity: OMM-Report_September2023.
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