Mortgage lock volume decreased 3% in July compared with June, led by a nearly 5% drop in purchase activity, according to Optimal Blue’s Market Advantage mortgage data report. The drop in purchase activity was offset by an increase in refinances: Cash-out and rate-and-term refinance locks rose 5% and 7% respectively, according to the secondary marketing software firm’s data.
Notably, non-QM lending reached a new milestone in July, accounting for 8% of total rate lock volume – the highest on record, according to the report.
At the same time, GSE-eligible originations fell to 52.2% and non-conforming lending rose to 16.8%, underscoring a market shift toward nontraditional financing solutions. This can be attributed to elevated rates, increased debt, growing openness to alternative forms of income verification, and conventional loan limits, which are prompting more borrowers to seek flexible qualification paths, the firm says.
“As we near the end of peak buying season, 2025 purchase activity has largely tracked with 2024,” says Mike Vough, head of corporate strategy at Optimal Blue, in the report. “With affordability still a major constraint, purchase volume in line with 2024 is generally a disappointment to the industry based on 2025 projections We’re seeing more cash-out and rate-and-term opportunities as borrowers with post-2022 loans respond to even modest rate improvements, and borrowers may be undergoing some financial stress based on cash-out increases.”
“There’s growing separation in the ways larger and smaller lenders are managing profitability,” Vough adds. “We saw an uptick in agency MBS executions, insinuating more market share is going to depositories and large IMBs, alongside stronger bid-to-cover ratios, indicating lenders
are chasing the highest price over other execution considerations. Combined with deeper engagement in OBMMI-tied CME futures and many conversations about capital markets strategies for non-agency loans, it’s clear lenders are being proactive in their pricing, margin and pipeline risk strategies.”
The average rate for a 30-year ended July at 6.72%, up 5 basis points from the end of June.
The average rate for FHA, VA and jumbo loans all ticked up, rising 3, 4 and 11 bps respectively to 6.50%, 6.33% and 6.89%.
The average loan amount for July was $382,476, down from $386,084 in June.
Of the top 30 MSAs, average loan amounts ranged from a high of $609,008 in the New York region to a low of $476,637 in Sacramento, Calif.
Photo: Phil Hearing