Mortgage lock activity increased in March as purchase demand strengthened despite a rising rate environment, signaling a shift in where volume is coming from as the spring market takes shape.
That’s according to Optimal Blue’s March 2026 Market Advantage report, which found total rate-lock volume rose 13% month over month and 26% year over year. Purchase activity led the gains, with purchase lock volume jumping 38% from February and 20% from a year earlier.
Purchase loans accounted for just over 71% of total volume in March, underscoring the market’s continued reliance on homebuying activity to drive production.
The shift from the prior month was significant. In February, refinances accounted for roughly 41% of total lock volume. By March, that share dropped to 28% as rates moved higher and purchase activity accelerated, reshaping the composition of overall production.
Refi Activity Turns Uneven As Rates Move Higher
Refinance activity remained part of the mix but showed signs of volatility as rates increased across all major loan types.
Refis accounted for 28% of total lock volume in March, down from earlier in the year but still elevated compared to 2025 levels.
Under the surface, the composition shifted:
- Rate-and-term refinances fell 34% month over month
- Cash-out refinances increased 9% month over month and 21% year over year
That divergence points to a more selective refinance environment, where borrowers are less responsive to incremental rate changes and more focused on specific use cases like liquidity and debt consolidation.
Higher Rates Reshape Borrower Behavior
Mortgage rates moved higher across the board in March, with the 30-year conforming fixed rate ending the month at 6.35%, up 45 basis points from February.
Jumbo, FHA and VA rates also increased during the month, alongside a rise in Treasury yields, reinforcing a higher-rate backdrop for both borrowers and lenders.
Despite that pressure, purchase demand held firm — a dynamic Optimal Blue identified as a key signal heading into the spring market.
“Purchase demand is carrying the market forward even as rates move higher,” said Mike Vough, senior vice president of corporate strategy at Optimal Blue.
Where Non-QM Fits In
While prior reports typically grouped these loans into a broader category, the March 2026 Market Advantage report now provides a specific breakout for Non-QM share, which reached 10% of total lock volume. This represents a significant recovery from a seasonal dip to 8% in January 2026, and a climb from the 8% to 9% range seen throughout 2025. When combined with Jumbo products, the broader non-conforming category reached 17.9% of overall volume, nearly one-fifth of the total market.
This growth directly mirrors a surge in Adjustable-Rate Mortgage (ARM) activity, which hit 12% of total production in March — its highest level since October 2022. The correlation suggests that as purchase demand strengthens in a higher-rate environment, borrowers are increasingly turning to a combination of ARM structures and Non-QM flexibility to find a path to qualification. Within the Non-QM segment, Bank Statement loans (33.4%) and Investor/DSCR solutions (32.3%) remain the primary drivers, providing essential liquidity for borrowers who fall outside traditional agency guidelines.
Secondary execution shifts as MSRs rise
March data also showed movement on the secondary side, reflecting how lenders are adjusting to a more durable higher-rate environment.
- Best-efforts-to-mandatory spreads tightened for 30-year products
- Agency cash window executions increased
- Mortgage servicing rights (MSR) values rose 6 basis points
The increase in MSR values reflects reduced expectations for refinance activity, reinforcing the shift away from rate-driven volume.
What This Means For LOs
- Purchase is carrying production. With more than 70% of volume tied to purchase, pipelines are increasingly dependent on buyer activity.
- Refi is targeted, not broad-based. Rate-and-term volume is pulling back, while cash-out remains situational.
- More deals are being structured, not qualified. As constraints persist, a growing share of transactions rely on non-conforming solutions to get across the line.
- Execution matters more. Secondary market shifts and rising MSR values point to a market focused on margin and strategy, not just volume.
March’s data shows a market that is holding together — but on different terms.
Purchase demand is doing the heavy lifting, even as rates move higher, while refinance activity is becoming more selective. Underneath that, more deals are being built outside the traditional conforming box — a shift that continues to redefine how production gets done in this market.
