Optimal Blue Reports Sharp Decline In Rate Lock Volumes – NMP Skip to main content

Optimal Blue Reports Sharp Decline In Rate Lock Volumes

Oct 12, 2023
rate lock
News Director

September sees 20% drop in rate lock volumes, marking a four-month downward trend, amidst rising interest rates and seasonal purchase fluctuations.

In its September Originations Market Monitor report, financial tech firm Optimal Blue reveals a significant 20% drop in rate lock volumes in the past month. This marks a four-month trend of declining volumes. The report, released today, attributes the dip to seasonal fluctuations in purchasing activity and a surge in interest rates to multi-decade highs.

Leveraging data from its product, pricing, and eligibility engine, Optimal Blue PPE, the monthly report provides insight into the current state of mortgage origination.

According to Scott Smith, Interim CEO of Optimal Blue, rising interest rates and a seasonal dip in purchases are major contributors to this four-month decline in rate lock volumes. 

“The refi share of total lock volume ticked slightly higher from 12% to 13%, primarily as a result of seasonal purchase declines. Cash-out volumes continue to be the lion’s share of refis at roughly double that of rate/term volumes, with virtually no mortgages in the money to refinance," he added. 

Further analysis of the report indicates:

  • A 20% decrease in purchase locks from August.
  • A 17% reduction in cash-outs and an 18% fall in rate/term refis from the previous month.
  • Year-over-year, total volumes plummeted by 33% from 2022.
  • Purchase lock counts, excluding rising home prices, dropped by 32% year over year and are down by 39% from 2019 levels.

In terms of loan types:

  • Conforming loans, which still constitute the majority at 57%, saw a dip, reverting to levels witnessed in 2018 and 2019.
  • FHA and VA productions gained shares, rising to 20.6% and 10.4% respectively.
  • Nonconforming loans, inclusive of jumbo and expanded guidelines, also increased, accounting for 11.1% of the total in September.

“As the market reacted to the Fed’s ‘higher for longer’ message, we saw mortgage rates pushed to multi-decade highs in September,” Smith continued. “We also continue to see average credit scores remaining high, suggesting tight credit availability and a relatively small cohort of buyers who can make a purchase in this historically unaffordable environment.”

Closing the month, the 30-year conforming rate stood at 7.41%, with FHA at 7.18%, VA at 7.00%, and jumbo loans at 7.60%. Compared to the previous year, rates are about a quarter point higher, while the spread to the 10-year Treasury narrowed by 17 basis points, finishing at around 4.6%.

About the author
Christine Stuart is the news director at NMP.
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