The upward march of mortgage rates continues to place more strain on the mortgage market, but purchase activity in the short term has been resilient, according to the most recent lock volume data from Optimal Blue.
Both purchase lock volume, which was up 12%, and purchase lock counts, which increased by 9%, actually rose month over month in October. The growth came despite a 65-basis-point upswing in the 30-year conforming rate, which ended October at 6.79%, per the Optimal Blue Mortgage Market Indices.
Purchase lock counts are also up 12% year over year, the second straight month with an annual pickup.
“Despite a tough rate trajectory, we saw strong growth in both purchase lock volume and counts, which are both positive signals for mortgage production,” said Brennan O’Connell, director of data solutions at Optimal Blue. “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.”
Indeed, the share of conforming loans among all loan products sank to just 53%, its lowest point since tracking started in 2018. FHA locks, conversely, grew to comprise roughly one out of every five purchase deals as buyers continued to flock toward affordable loan programs.
The increase in rates also scuttled September’s short-lived refi boomlet, with rate-and-term refinance volume falling by 45% monthly. Cash-out refis edged upward by 6% from September, but refinance share still fell to only 23% of all lock volume. Refinances were still a larger part of the mix than they have been of late; since spring 2022, October saw higher refi levels than any other month other than August and September of this year.
Overall lock volume dropped 2% month over month. The average purchase price, according to Optimal Blue’s data, rose from $475,800 to $482,400; the average loan amount, however, retreated to $380,100, down $3,600 from September.
