Mortgage activity fell across all loan types in May - National Mortgage News

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In spite of 14 million high-quality refinance candidates, mortgage origination volume hit a 13-month low in May, according to Black Knight.

In the shadow of the severe housing supply shortage, the Originations Market Monitor Report showed activity fell 4.8% from April, including drops of 3.4% for purchases, 3.4% for cash-out refinances and 8.2% for rate-and-term refinances.

Annually, overall lending activity dwindled by 0.7% as rate-and-terms decreased 44.8% while purchases and cash-out refis grew by 43.4% and 32.2%, respectively. The 30-year fixed-rate declined again, falling to a 3.15% average from 3.23% in April.

“The dip in refinance locks seems to have more to do with borrower psychology,” Scott Happ, president of secondary marketing technologies at Black Knight, said in a press release. “Certainly, February's rise in rates drained some of the excitement in the market, but refinance activity simply hasn't rebounded as expected."

The refinance share of loan volume fell to 44% from 45% in April despite refi incentives rising by 15% over the last two months. Refinance rate locks decreased 27% from March to May, “decelerating in what would otherwise be a time of expected acceleration," Happ continued.

Of the 10 largest metropolitan areas by origination volume in May, only Seattle experienced origination growth from April, rising 1.4%. Los Angeles held the top spot in market share with 5.2% of the national total, as its activity ticked down 5.8% month-over-month. The Washington D.C. statistical area accounted for 4.4% while fading 1.7% from April. The New York metro came next at 4.3% but individual originations declined 9.1% monthly. Los Angeles, Phoenix and San Francisco had majority refinance shares.

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