Home shoppers following rates closely jumped on retreating rates in March, giving the spring buying season a boost.
Black Knight’s March 2023 Originations Monitor showed that rate lock dollar volume exploded in March, up 43%, as rates retreated due to economic uncertainty.
Lock volumes rose in all categories. Purchase locks were up 44% month-over-month, significantly higher than its average of 30% across the last five years.
“This continues to be an incredibly rate-sensitive housing market, and March’s rate lock activity perfectly illustrates this dynamic,” said Andy Walden, vice president of enterprise research at Black Knight.
He explained that rates were inching up at the beginning of the month, but came down later in March due to banking sector turmoil.
“The result? Another quick surge in originations, particularly in the purchase market,” he said.
Refinances, which have faced significant downward pressure in the current high-rate environment, also saw a boost. Cash-outs increased by 31%, while rate-term locks rose by 36%.
Both remain historically low, however. The number of homeowners who are eligible for a refinance has fallen by 60% since the beginning of 2022 due to rising interest rates. Plus, the jump in purchase originations pushed them to an even smaller share of the pipeline: 13%, a cycle low.
Despite the gains, purchase lock counts are still below both last year’s (-37%) and pre-pandemic (-12% against March 2019) levels.
And while March may have ended on an optimistic note, the rest of the year is expected to follow this on-again, off-again pattern, resulting in a relatively flat market.
Rick Sharga, executive vice president of Market Intelligence for ATTOM Data Solutions, predicts that prices will peak around 8% this year but “then gradually come down over the course of the year somewhat to hang in the range of 6%” for the 30-year FRM.
Nadia Evangelou, senior economist and director of Real Estate Research for NAR, anticipates a serious drop in home sales as rates swing, with sales dropping anywhere from 7% to 15%.
“The hope is that, as supply and demand within the housing market normalizes, interest rates can start to come back down to earth. Until this happens, those who simply cannot afford the costs of borrowed money will have to continue to wait,” Scott Krinsky, a partner in the Residential Banking Department of Romer Debbas, a Manhattan real estate law firm, told Bankrate.
“For those waiting on the sidelines holding out hope that rates may soon drop, they might have to accept the fact that the lower-rate financing windows open in 2020 and 2021 have closed.”
Follow Us On Twitter:
The Mortgage Bankers Association's National Advocacy Conference is taking place in Washington, D.C. What are you seeing in your markets and what do elected leaders need to know? #MBANAC23 pic.twitter.com/tLjXMo1g4E
— The Mortgage Note (@TheMortgageNote) April 18, 2023
Read More Articles:
MBA Chief Economist: Expect Mortgage Originations To Decline In 2023
MBA’s National Advocacy Conference Kicks Off In Washington, DC
Market Insights: Salt Lake City Slowing, Offering Opportunities For Buyers