A 52% surge in rate-and-term refi locks during March drove a 24% overall increase in mortgage lock volume as early spring buyers returned to the market and homeowners jumped on lower rates, according to Optimal Blue’s latest Market Advantage report.
Meanwhile, non-conforming loan share climbed to its highest level since April 2022 as borrowers sought more flexible options and higher loan amounts.
“March brought a notable shift in borrower behavior,” says Brennan O’Connell, director of data solutions at Optimal Blue, in the report. “Refinances made up a quarter of all lock activity for the first time in six months, and we saw a clear rise in non-conforming loan share as buyers looked for more flexible options and higher loan amounts. These are key indicators that consumers are actively adapting to the current rate environment.”
Purchase volumes were up 21% month-over-month although still down 2% on a year-over-year basis, according to the firm’s data.
Refinances took share from purchase loans in March. Strong growth in refi activity during pushed the share of refinances up to 25%, the highest level seen since September 2024. The pull-through rate for refinances was 63.3%.
The pull-through rate for purchase loans was 82.9%.
Conforming loan production continued to hover near historic lows, while non-Agency loan share hit its highest level since April of 2022.
Non-conforming loans, which include jumbo and non-QM loans, accounted for 16.8% of total rate lock volume. Conforming loan share fell to 51% and FHA share dropped to 19.6%, while VA volume inched upward, reaching nearly 12% share.
Adjustable-rate mortgages accounted for just below 9% of total rate lock volume in March, a result tied to growing demand for non-conforming loan options.
After a strong rally the last week of February, the 30-year conforming fixed rate finished the month flat at 6.6%. FHA rates fell 8 basis points to 6.27%, while VA and jumbo rates rose a modest 3 and 4 bps to 6.13% and 6.73%, respectively.
March saw a three-point increase in average credit scores for both cash-out and rate-and-term refinances, rising to 735 and 699, respectively, as higher-credit homeowners acted quickly on refinance opportunities.
The average debt-to-income (DTI) ratio across all loans dropped from February’s 37.3% to 36.7% in March, reflecting income growth outpacing the rise in household debt.
This decrease in DTI represents a healthier balance between monthly income and debt than was tracked in previous months.
The average home purchase price rose from February’s $480,000 to $486,000 in March, driving an increase in average loan amount from $380,500 to $391,700.
Photo: Georg Bommeli