Rate Sensitive Borrowers Are Causing Rate Lock Volume To Jump 43%. Are Borrowers About To Go Into Panic Mode?

Rate lock volume jumped 43% in March. Some experts say this is due to market conditions. 

Lock volumes increased across the board. This was led by purchase locks jumping 44% in March. This was above the 30% average February to March gain seen across the past 5 years. 

Purchase locks showed significant improvement month over month. However, volume is down 40% compared to March 2022. 

Cash-out refinance were up 31% in March from the previous month. Rate/terms grew by 36% from the same period last year.

Cash-out refinance were down 80% and rate/term refinances declined 71%. 

In early March, originations faced pronounced downward pressure as mortgage rates climbed toward 7%. 

The 30-year fixed mortgage rate climbed to the highest levels of the year in early March. The rate reached 6.8% before dropping to 6.4% by the end of the month.

The surge in purchase lending pushed the refi share of the market mix down to a low of just 13%. The ARM share of the month’s activity fell to less than 9% as borrowers took advantage of falling rates and shifted toward fixed-rate products.

The Federal Housing Administration (FHA) loan share increased to more than 20% of the pipeline in March. This is up from 18% at the start of the year and 12% from a year ago. 

A cooling market lacking multiple bids and all-cash offers has made sellers more receptive to FHA offers. 

The FHA also announced a 30 basis point reduction in the annual premium to mortgage brokers in February. As a result, Most borrowers are expected to see mortgage insurance premiums (MIPs) reduce to 55 bps from 85.

With the cut, housing costs will reduce by an average of $800 for roughly 850,000 homebuyers and homeowners in 2023, the White House said following the FHA’s announcement.

This Article Originally Appeared On Lender Meltdown

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