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New numbers show the resilience of the housing market and the impacts of recent drops and spikes in mortgage rates.
On Tuesday, Optimal Blue released its October 2024 Market Advantage Mortgage Data Report, which shows purchase lock volume grew by 12% month-over-month.
Purchase lock counts grew 9% year-over-year.
FHA locks rose last month, accounting for one in five purchase transactions, as buyers sought more accessible financing options. Non-conforming loans also gained ground as borrowers leaned more heavily on non-QM and jumbo loans to adapt to affordability challenges.
With a 65-basis-point increase in the 30-year conforming rate, there was a notable shift away from conforming loans. Their share fell to its lowest level since tracking began in 2018, representing 53% of volume.
The amount of money homebuyers borrowed also decreased. The average loan amount fell by $3.6K to $380.1K.
Jim Glennon, vice president of hedging and trading client services at Optimal Blue, explained that the shift away from conforming loans was directly tied to the increase in mortgage rates. Homeowners interested in refinancing took advantage of lower rates in September, and once those rates began to rise again, they pulled back.
Glennon said first-time homebuyers remained active in October, so that is why the share of FHA loans rose.
Glennon is watching the numbers for cash-out refinance activity, which saw a 6% increase last month. With credit cards, car loans, and consumer loans putting pressure on Americans, he expects people will continue to tap into their home equity.
“Cash-out refinances have actually been pretty resilient and one could say that’s something that may continue as there’s just a record amount of home equity out there in people’s homes,” Glennon said.
Glennon said when it comes to what will happen for the remainder of 2024 and moving forward into 2025, incoming economic data will dictate what direction rates move. He advises people interested in buying or refinancing to talk to a loan originator. Optimal Blue’s website is another resource for people looking for information.
“If I’m a casual observer and I just want to know where interest rates are, we have a ton of data on our website in addition to the market advantage report, where you can see where average interest rates are being locked day-to-day,” Glennon said.
He said knowing in real-time when rates drop can be beneficial to potential borrowers.
“The data that we’re distributing today is literally loans that were locked with borrowers yesterday. It includes the rates, points, and fees. That’s a very early look at what rates are actually being offered to borrowers and accepted by borrowers, versus a survey that happened later that maybe is just based on anecdotal information,” Glennon said.
Consumer confidence in the housing market is improving. The Fannie Mae Home Purchase Sentiment Index increased 0.7 points in October to 74.6, its highest level since February 2022.
Still, the share of consumers who think it’s a good time to buy a home is just 20%, while the share who think it’s a good time to sell a home declined to 64%.
