Rate lock volume activity in the residential mortgage industry increased across the board in March after dipping in February, according to data compiled by the Mortgage Capital Trading, Inc. (MCT) MCTlive! Lock Volume Indices report.
In March, purchase lock activity increased 23% compared to February, according to the report, while rate/term refinance volume grew by 39%. Cash-out refinance volume also saw an increase of 28% last month, while overall lock activity spiked 24% compared to the month prior.
“The fall of Silicon Valley Bank and the expectation of the fed to ease rate hikes resulted in a modest drop in mortgage rates in March,” the report states. “As the fed reaches for its terminal fed funds rate and we begin moving into the spring, we should see the effect on purchase activity.”
However, last month’s total lock activity was still low compared to the same period one year ago. Compared to March 2022, total lock activity was 32% lower last month, primarily due to a drop in total refinance demand, MCT said.
Purchase lock activity was also 21% lower than at the same point last year, while rate and term refinance volume was 63% lower than one year ago.
The largest year-over-year decline occurred with cash-out refinance activity, which was down 75% last month compared to March 2022.
Rate lock activity compiled by MCT is based on the actual dollar volume of locked loans rather than the number of applications, the company said.
“Especially in a tight purchase market, MCT believes its methodology (using actual loans locked vs. applications) is a more reliable metric,” the company said. “There is a higher likelihood of having multiple applications per funded loan, and [prequels] do not convert at as high of a rate in the current market as has historically been the case — especially when applications are counted at the early stage of entering a property address.”