Black Knight Mortgage Monitor for October: “2020 On Pace to See More than 9 Million Refinance Transactions”

Black Knight released their Mortgage Monitor report for October today. According to Black Knight, 6.44% of mortgages were delinquent in October, down from 6.66% of mortgages in September, and up from 3.39% in October 2019. Black Knight also reported that 0.33% of mortgages were in the foreclosure process, down from 0.48% a year ago.

This gives a total of 6.77% delinquent or in foreclosure.

Press Release: 2020 On Pace to See More than 9 Million Refinance Transactions; 82% of Refinancing Borrowers Not Retained

Today, the Data & Analytics division of Black Knight, Inc. (NYSE:BKI) released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage performance, real estate and public records datasets. This month, the company looked into Q3 2020 mortgage originations – with a focus on refinance lending – and mortgage servicers’ success in retaining the business of refinancing homeowners. As Black Knight Data & Analytics President Ben Graboske explained, while Q3 2020 quarterly origination volumes broke records across the board, retention rates have suffered amid the surge of lending activity.

“As our rate lock data had suggested last month, Q3 2020 originations hit record highs in purchase, refinance and overall lending as record-low mortgage rates and a delay to the normal spring home-buying season spurred both the purchase and refinance markets,” said Graboske. “Some 2.7 million homeowners refinanced their first-lien mortgages in the third quarter, bringing the total through September 2020 to 6.4 million. What’s more, consolidated rate lock data from Black Knight’s Compass Analytics and Optimal Blue divisions suggests that number could climb above 9 million by year’s end. And, with rates continuing to sit at record lows, refinance incentive remains at historic highs. As of the last week of November, 19.4 million 30-year mortgage holders could likely both qualify for and benefit from a refinance.
emphasis added

BKFS Click on graph for larger image.

Here is a graph from the Mortgage Monitor that shows first lien refinance activity.

From Black Knight:

• Through the first three quarters of the year, some 6.4 million homeowners have refinanced their primary mortgage, with that number on pace to climb above 9 million by the end of the year

• While cash-out activity has ridden the wave higher, cash-outs only made up 27% of Q3 refinance lending, the lowest such share in seven years

• The average cash-out amount fell to $51,600 (from $63,000 in Q2), pushing the volume of equity withdrawn in Q3 to down $37 billion, the lowest such equity withdrawal volume since Q2 2019

• This suggests cashing out equity was a distant second priority to borrowers locking in record low rates as their primary driver to refinance

BKFSAnd on delinquencies from Black Knight:

• Delinquencies improved in October, falling to 6.44%, their lowest level since March

• Despite five consecutive months of improvement, there are still nearly 2X as many delinquent mortgages (+1.6 million/+91%) as there were entering 2020

• Serious delinquencies (90+ Days) improved in October as well, but volumes remain at more than 5x (+1.8M) their pre-pandemic levels

• Though COVID-19 case rates are rising across the country, new delinquencies remain below the three-month average and have been unaffected by these surges, at least for now

There is much more in the mortgage monitor.