Purchase lock volume increased 12% in October compared with September, according to Optimal Blue’s Market Advantage data report.
The increase came despite rising rates and was due mainly to pent-up demand, the secondary marketing software firm says.
The report also shows a notable shift away from conforming loans, indicating affordability concerns are pushing buyers toward alternative financing options.
The increase in purchase locks came despite a 65-basis point rise in mortgage rates that came during the the month.
“Despite a tough rate trajectory, we saw strong growth in both purchase lock volume and counts, which are both positive signals for mortgage production,” says Brennan O’Connell, director of data solutions at Optimal Blue, in a statement. “While purchase growth is encouraging, signs of how buyers are adapting to higher rates indicate continued affordability pressures. Production mix data shows a shift from conforming loans to FHA and non-conforming products, which often offer more flexible financing terms.”
The average rate for a 30-year fixed-rate conforming mortgage ended October at 6.79%.
FHA rates rose by 54 bps to 6.43%, while VA rates saw the largest increase, climbing 73 bps to 6.36%.
The average rate for a jumbo loan increased a more moderate 41 bps to end the month at 6.82%.
Year-over-year, purchase lock volume was up 9%, continuing a positive trend that started in September.
The increase in purchase locks reflects ongoing demand, the firm says.
Meanwhile, demand for refinances dropped in October, due to rising rates.
Rate-and-term refinance volume dropped 45% month over month.
Cash-out refinance activity saw a slight 6% increase, but the overall refinance share declined to 23% of total volume.
With the exception of August and September, refinance levels were still higher than any other month since April 2022.
Photo: Maria Ziegler
