Locked loan volume increases on falling mortgage rates

Rate-lock activity is benefiting from lower mortgage rates.

According to the June Market Advantage report from Optimal Blue, total lock volume increased by 1.95% compared to May, after volume dropped by 5.87% compared to April. Refinances pushed the overall volume up, with cash-out refis rising 8.1% month over month and rate-and-term refis jumping 17.4%.

Falling mortgage rates dictated the increase. The benchmark rate for a 30-year conforming mortgage dropped by 17 basis points to 6.67%. The 30-year rates on jumbo (6.78%), Federal Housing Administration (6.47%) and U.S. Department of Veterans Affairs (6.29%) loans also dropped.

Tariffs remain a wild card in the mortgage space and the housing market more broadly. Markets have responded poorly to Donald Trump’s trade war. After the April 2 announcement of a new global tariff regime, markets across the board dropped and rates jumped to 7%.

Mortgage rates began to drop after Trump paused the tariffs, but on Monday he reignited the issue by threatening steep tariffs on Japan, South Korean, South Africa, Laos, Myanmar, Kazakhstan and Malaysia. While the pause on many global tariffs was set to expire Wednesday, he also pushed that deadline back to Aug. 1.

Optimal Blue reported that last month’s loan product mix shifted slightly toward conforming loans, as they accounted for 53% of all products, up 114 basis points from the prior month. FHA loans fell by 80 bps for a share of 18.9%.

Trump’s aggressive immigration policy may be impacting who’s buying homes. The share of mortgages bought by U.S. citizens rose 74 bps to 93.4%, while the shares bought by permanent residents (-6 bps) and non-permanent residences (-69 bps) both fell.

Among the top 20 metropolitan areas, New York City accounted for the most lock volume at 5.2%, an 11.9% rise compared to May. Philadelphia (+9.9%), Chicago (+8.1%), Los Angeles (+8%) and Boston (+7.5%) also showed substantial monthly jumps in lock volume.

Metro areas that experienced steep monthly declines in lock volume include Denver (-8.3%), Baltimore (-8.3%), Austin (-7.7%) and Seattle (-5.5%).

The share of adjustable-rate mortgages (ARMs) fell from 9.11% in May to 8.81% in June. Purchase pull-through rates — the share of applications that were closed and funded — rose 170 bps to 84.8%, while the refi pull-through rate was up 29 bps to 62.6%.