RDFN - Rate lock volume surges 43% in March due to seasonal tailwinds lower rates: Black Knight

2023-04-10 10:12:37 ET

Overall rate lock dollar volume rebounded 43% in March from a month before, driven by seasonal tailwinds, falling interest rates and stronger performance in the purchase market, according to Black Knight's ( BKI ) Originations Market Monitor report published Monday.

"It is not unusual for rate locks to surge in March ahead of the spring homebuying season, although this year's rise outpaced what we typically see on a seasonal basis," said Andy Walden, vice president of enterprise research at Black Knight.

Purchase locks surged 44% M/M in March, cash-out refinances rose 31% and rate/term refis, which had been hovering near record lows, gained 36%, the report said. Even so, refi locks fell to just 13% of March's activity, representing a new low for this cycle given the disproportionate climb in purchase locks.

"A cooling market lacking the multiple bids and all-cash offers of the recent past has made sellers more receptive to FHA offers," Walden added. "That, combined with a recent reduction in FHA mortgage insurance premiums and a mid-month increase in the FHA-to-conforming spread, made FHA loans comparatively more attractive."

In a separate report, however, Redfin ( RDFN ) noted that mortgage-rate locks for second homes dropped 52% from pre-pandemic levels on a seasonally adjusted basis in March, compared with a 13% slump for primary homes.

Although banking pressures that emerged last month -- along with still-high home prices and persistent inflation -- pushed interest rates lower, they are still elevated by historical standards. As a result, homebuying demand continued to be held back.

Second-home buyers, in particular, were "deterred by high rates, newly instituted loan fees, [and a] slowing rental market," Redfin explained. Loan fees for second homes were boosted by the federal government in April 2022.

Previously, (April 5) mortgage applications down after four weeks of increases .

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