Under the weight of higher interest rates, mortgage production activity took a nosedive in September, marking the sixth consecutive month of decline, Black Knight said.
Rate lock dollar volume was down 9.9% month-over-month and at its lowest level since December 2019, according to the data vendor's monthly origination
Lock volumes fell by 30% between July and September. Year-over-year, rate lock volume was down a staggering 60%.
Rising interest rates and their attendant affordability challenges are decimating mortgage production activity, the report said. These factors "have fundamentally changed the mortgage origination market for the remainder of 2022 and the foreseeable future," said Scott Happ, president of Optimal Blue, a division of Black Knight, in a statement.
Rate lock activity declining in September was largely driven by a dip in cash-out refinance locks, which were down 26.2% month-over-month and 78.2% year-over-year, Black Knight's report said.
Rate-and-term refinance mortgages, which are most vulnerable to interest rate fluctuations, held steady at -0.1% from
Purchase locks, which made up the vast majority of September activity, were down 7.6% from August and 29.4% from the year prior.
All loan products saw their market share shrink last month except for non-conforming loans — that segment's share grew to 15.8%.
Conforming loans made up 56.4% of September's rate locks, FHA locks had a 17% share, and VA locks made up 10% of last month's rate locks.
"Home prices are pulling back in a growing number of markets, but across the country, affordability remains a challenge," said Happ. "This is likely one reason why non-conforming loans gained market share and we saw an increase of the average loan amount."
The average loan amount increased by $6,000 to $346,000 in September, the report said.
