Mortgage rate lock volume dropped 25% in November compared with October but was up 12% compared with November 2023, according to Optimal Blue’s Market Advantage mortgage data report.
The month-over-month drop in lock volume came as interest rates hit their highest levels since early July, creating headwinds for affordability.
Purchase lock volume was down 21% compared with October, Optimal Blue says.
Cash-out and rate-and-term refinance volumes fell 20% and 50%, respectively.
Year-over-year, purchase locks were up 5%, resulting in some optimism. Cash-out and rate-and-term refinances increased 35% and 95%, respectively.
Although mortgage rates increased for most of the month, they dropped slightly in the week leading up to the Thanksgiving holiday. The average rate for a 30-year fixed-rate conforming mortgage finished the month down 11 basis points from October.
FHA and VA 30-year rates fell as well, closing the month down 7 bps and 20 bps, respectively. The 30-year jumbo rate showed a slight increase to close the month, up 16 bps from the end of October.
FHA loans gained share at the expense of all other loan types, notching up another three-quarters of a point to account for 20% of total production, Optimal Blue says in its report.
That puts FHA market share back near its peak of just over 22% of total production in November 2023.
VA loan volume fell in November, but increased 11% year-over-year.
Government production in total accounted for nearly one-third of loan volume in November.
“The rising percentage of FHA loans indicates affordability continues to be a concern among homebuyers as we move into year-end,” says Brennan O’Connell, director of data solutions at Optimal Blue, in the report. “In spite of the recent dip in purchase and refinance activity, we see the year-over-year improvements in purchase volume, cash-out and rate-and-term refinances as a bright spot.”
Photo: Artem Beliaikin
