Total mortgage lock volume dipped 1.8% in August compared with July as a roughly 10% drop in purchase locks outweighed the strongest month for rate-and-term refinances this year, which surged nearly 70%, according to Optimal Blue’s latest Market Advantage Report.
Notably, non-QM lending reached a new milestone in August, climbing to a record 8.3% of originations – up from 5.6% a year earlier and just 1.4% in August 2020 – extending the steady growth trend first highlighted in last month’s report.
“Borrowers are responding quickly to rate improvements, driving the strongest month for rate-and-term refinances we’ve seen this year,” says Mike Vough, head of corporate strategy at Optimal Blue, in the report. “At the same time, purchase activity is beginning its typical seasonal decline, while product mix is shifting with non-QM lending at record levels.”
The average rate fr a 30-year ended August at 6.49%, down nearly a quarter point from July, the report shows.
Jumbo, FHA and VA rates also declined, falling 32, 24 and 33 basis points (bps), respectively.
The report also points to significant changes in capital markets execution, with securitization playing a larger role in loan sales. Agency cash window deliveries fell to 24% while agency MBS executions climbed to 40%, highlighting stronger securitization activity among larger lenders.
“This trend underscores how lenders are strategically adapting to optimize execution in order to gain market share,” Vough said. “We’re seeing deeper engagement in securitization alongside more loans sold to the highest price during loan sales, signaling that capital markets strategies are adjusting to increase profitability.”
Loans sold at the highest pricing tier rose to 75%, a 5-point increase, suggesting lenders delivered cleaner loan profiles and captured stronger pricing.
MSR values dipped to 1.15% for conforming 30-year loans, down 4 bps, in line with lower rates that compressed servicing valuations.
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