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Mortgage application form on wooden table.


With mortgage rates climbing 91 basis points to 6.72% in September, it’s no wonder mortgage originations are sliding.

Overall rate locks dropped ~10% from August, bringing origination activity down 30% in the past three months and almost 60% from a year ago. And it’s not likely to improve soon, according Black Knight’s September 2022 Originations Market Monitor report.

“Interest rate and affordability challenges have fundamentally changed the mortgage origination market for the remainder of 2022 — and the foreseeable future. Interest rates are now at their highest level in 15 years, while affordability is at 37-year lows,” said Scott Happ, president of Black Knight’s Optimal Blue division.

Note that the higher mortgage rates and decline in mortgage originations are also coinciding with the autumn months, which are seasonally slower for home purchases.

Among the reports highlights:

Refinances were just 16% of September mortgage originations, down from 18% in August. Cash out refi made up almost three-quarters of all refinance activity.

Rate/term locks, which had been plunging in recent months, appeared to hit a floor, slipping only 0.1% in the month at a level that’s 93% lower than September 2021.

The population of refi candidates hit an all-time low, with ~90% of all active first-lien mortgages having rates below 5%.

Purchase lock counts, as opposed to dollar volume, to exclude the effect of home price growth, remains 10% below 2019’s prepandemic level.

The trends bear out in mortgage application data as well. In the week ended Sept. 30, the MBA Mortgage Application Composite Index fell 14%, with the purchase index off almost 13% and the refinance index down almost 18%.

In the first week of October, mortgage rates edged down to 6.6% due to economic uncertainty, Freddie Mac said. SA contributor Logan Kane says it’s “game over for the housing bubble.”

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