
Conforming Lock Volumes Hit New Low In December

As borrowers increasingly rely on government and non-conforming loans, the GSE market has shrunk dramatically
The thirst for financing created a boost in home loan volume in December. A closer look at the numbers, though, reveals the conforming loan share hit a record low.
According to the latest report from Optimal Blue, mortgage lock volume in 2024's final month was up 26% year-over-year. The boost was driven by an 18% increase in purchase money mortgage, a 43% rise in cash-out refinances and an 82% jump in rate-and-term refinances, the company said.
At the same time, though, the conforming loan share dipped to 51%. That share has been hovering around historic lows for the past five months. But, December’s share was the lowest since Optimal Blue began reporting lock data in January 2018.
Meanwhile, FHA, VA and non-conforming loans gained ground, with FHA locks rising to 21%, VA going up nearly11.5%, and non-conforming loans increasing by 16%.
The trend away from GSE loans reflects “how borrowers are relying increasingly on government and non-conforming loans to finance in a challenging market,” Optimal Blue’s Brennan O’Connell said in a statement.
Overall, while a seasonal dip in lending was expected, “the year-over-year growth reflects resilience and an increasing demand for refinance opportunities driven by rate adjustments,” the company’s director of data solutions also noted.
Other highlights from the December report:
- The share of refinance locks climbed to 24%, the highest since September. Rate-and-term refinances surged 33% month-to-month, while cash-out refinances registered a 3% decline. In line with seasonal norms, purchase volumes dropped 13% from November while cash-out refinances fell 3%.
- The credit quality of purchase loans hit a seven-year high for the month. Actually, the average buyer credit score was higher each month in 2024 than the previous 72 months.
- The average score for purchase loans was 737. For rate-and-term refis, the typical score was just a few points lower at 727. But for cash-out refis, it slid to 697.
- As house prices fell last month, loan amounts leveled off, The average loan amount rose by just $500 to $376,900, while average purchase price dropped by $4,100 to $473,700.