Data shows across-the-board decline in rate lock volumes

Despite interest rates trending downward in April across all loan products, rate lock volume reached its lowest point in a year.

Stats from Black Knight’s latest report revealed that mortgage rates fell throughout much of April, with the month-end average conforming 30-year rate declining 17 basis points (bps) to 3.17% month over month but remaining 34 bps higher than the rate in January.

However, the drops did not seem enough to sway borrowers – particularly refi borrowers – back to the market, Black Knight Secondary Marketing Technologies president Scott Happ said.

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Overall lock volume tumbled 11.3% in April, with declines seen across purchase (-6%), cash-out (-13%) and rate/term (-20%) refinance locks. The decline marked the lowest overall volume since May 2020 and the lowest rate/term refinance lending volume since last January.

“As volume has tightened, we’ve seen average credit scores decline across all products and purposes, and conventional loans lose share to government-backed mortgages,” Happ said. “Neither are unexpected developments given that, when rates begin to rise, higher-credit borrowers tend to simply not engage.”

The refi share of market activity was down to 45% in April from 48% in March. Compared to the same period a year ago, rate/term refis are down more than a third (-34%) from last April, while both cash-outs (+27%) and purchase loans (+114%) are up on an annual basis.

“Right now, though, rates are still hovering in a historically comfortable place, with approximately 14.5 million homeowners who could still likely qualify for and benefit from a refinance. It will be interesting – and telling – to see both how rates move in the coming weeks and whether or not we see refi volumes increase as a result,” Happ said.