The year started out with an increase in mortgage activity, according to Optimal Blue's Originations Market Monitor report.
“The new year kicked off with continued rate relief and a 36% month-over-month gain in total lock volume, driven by a seasonal 38% increase in purchase lock volume,” said Brennan O’Connell, director of data solutions, Optimal Blue. “We also saw the smallest year-over-year decline in purchase lock counts since May 2022, which may foreshadow a stabilizing market and friendlier lending environment in 2024.”
The report highlights significant increases in cash-out and rate/term refinance volumes, rising by 30% and 20%, respectively. Moreover, the Optimal Blue Mortgage Market Indices (OBMMI) revealed a drop of four basis points in the 30-year conforming rate, settling at 6.53% by the end of January, despite a mid-month peak at 6.7%. Conversely, jumbo rates experienced an 11-basis point increase since the end of the previous year.
Mortgage rates decreased despite a 15-basis point rise in the 10-year Treasury yield, leading to a 19-basis point narrowing of the mortgage-to-Treasury spread, which reached levels unseen since mid-2022. This narrowing trend is notable, especially considering the spread had surpassed 300 basis points multiple times in 2023.
Conforming products gained market share in January, representing 57.3% of total volume, while non-conforming products, including jumbo and non-QM, accounted for 9.7% of total volume. The report also highlighted shifts in the shares of Ginnie Mae-eligible products, with FHA and VA shares decreasing while adjustable-rate mortgage (ARM) products remained consistent.
The report pointed out an increase in average credit scores across all products and loan purposes, along with a rise in the average loan amount from $349,500 to $355,600. After six consecutive months of decline, the average home purchase price rebounded, jumping from $435,900 to $444,900.
