HousingWireHousingWire
A strong wave of refinance activity and renewed buyer interest lifted mortgage rate lock volumes in March, according to Optimal Blue’s latest Market Advantage report.
Data shows a 24% monthly jump in overall lock activity, driven by falling interest rates and the start of the spring buying season.
While total mortgage volume remains down 2% compared to the same time last year, purchase lock activity also saw a 21% monthly increase. Refinancing made a significant comeback in March, accounting for 25% of all mortgage locks, the highest share since September 2024.
“March brought a notable shift in borrower behavior,” said Brennan O’Connell, director of data solutions at Optimal Blue. “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.”
Refinancing activity surged, with rate-and-term refis up 52% compared to February and cash-out refis increasing by 20%. The combined refi share hit 25% of all rate locks. The pull-through rate for refinance loans rose to 63.3%, indicating stronger borrower commitment compared to earlier months.
Despite positive monthly momentum, purchase loan volume was still down 2% year-over-year. When analyzed by loan count rather than dollar volume, controlling for rising home prices, the decline was steeper at 6%. Purchase loan pull-through rate stood at a healthy 82.9%.
Additional report takeaways included:
- Non-conforming loans gain popularity: Borrowers seeking flexibility turned to non-conforming products at the highest rate since April 2022. These loans, including jumbo and non-qualified mortgage offerings, accounted for 16.8% of total lock volume. Conforming loan share fell to 51%, FHA volume dropped to 19.6%, and VA loans edged up slightly to nearly 12%.
- ARMs see uptick: Adjustable-rate mortgages (ARMs) rose to just under 9% of total lock volume, signaling buyer interest in alternative paths to affordability amid persistent rate pressure.
- Interest rates hold steady: The OBMMI 30-year conforming fixed rate held flat at 6.6% after a February rally. FHA loans saw an 8-basis point drop to 6.27%, while VA and jumbo loan rates nudged up slightly to 6.13% and 6.73%, respectively.
- Stronger refi credit profiles: The average credit score for rate-and-term refinances increased to 735 in March, while cash-out refi scores rose to 699. The rise suggests that higher-credit borrowers are leading the current refinance wave.
- Debt ratios improve: The average debt-to-income ratio declined from 37.3% in February to 36.7% in March, reflecting stronger income growth relative to household debt, a sign of improving borrower financial health.
- Home prices, loan sizes increase: Rising home values contributed to a higher average purchase price of $486,900 in March, up from $480,200 the previous month. Correspondingly, the average loan size grew from $380,500 to $391,700.
The full report can be found here.
