Mortgage Lock Volume Jumps 28% in September as Rates Fall, Boosting Refinance Activity
WASHINGTON D.C. – A meaningful drop in mortgage rates throughout September fueled a 28% increase in total mortgage lock volume compared to August, according to the latest data from Optimal Blue’s Market Advantage report. The surge marks the largest refinance wave since early 2022.
The decline in rates triggered a 153% month-over-month increase in rate-and-term refinances and a 13% rise in cash-out refinances, driving the refinance share of all locks to 39%. Purchase locks also saw gains, increasing 6% from August and 9% year-over-year, exceeding typical seasonal expectations.
“The rate rally that began in late summer accelerated in September, and borrowers reacted quickly,” said Mike Vough, head of corporate strategy at Optimal Blue. “Rate-and-term refinance locks jumped 153 percent month over month, lifting total refi share to 39 percent – the highest level we’ve seen in more than two years. That momentum also spilled into purchase lending as affordability improved, notably for first-time homebuyers.”
Shifts were also observed in capital markets execution, with sales to the agency cash window and aggregators each decreasing by 100 basis points to 23% and 32% respectively. Together, agency mortgage-backed security (MBS) executions rose from 40% to 42%, indicating increased securitization activity among larger lenders.
The percentage of loans sold at the highest pricing tier increased by 300 basis points to 78%, suggesting a reduced emphasis on delivery profiles and fewer eligibility exceptions impacting pricing.
“This combination of stronger pricing and greater securitization participation underscores lenders’ efforts to optimize execution as volume rebounds while maintaining profitability,” Vough stated.”Even as MSR values edged down 6 basis points in September, nearly eight in ten loans were sold at the highest pricing tier, showing how lenders are offsetting that compression through broader investor engagement.”
Pull-through rates also improved, rising 58 basis points to 83.6% for purchases and 82 basis points to 60.2% for refinances.
The average loan amount in September was $403,746, up from $386,387 in August and $382,476 in July.Average loan amounts varied geographically, ranging from $605,542 in metro New York to $305,829 in Indianapolis. Average loan-to-value (LTV) ratios also differed by location, from 73.57% in New York to 82.22% in Indianapolis.
