Rising purchase activity created a strong start to the June mortgage market,
Total rate-lock volume in June rose 10% from May and was 15% higher from the same time last year. Of all the mortgages that were locked during this month, more than 81% were from people actively buying a home. Refinances remain unchanged at 19%, much higher than 2025 levels.
"Together, those trends point to a market that is battle tested and that has adapted to a higher-for-longer rate environment," said Mike Vough, senior vice president of corporate strategy at Optimal Blue in a press release.
First-time buyers homebuyers accounted for 45% for conforming purchase locks in June, 3% higher than last year. However, purchase activity remains concentrated in high-cost markets. The average locked loan increased to nearly $400,000.
Non-conforming lending reached its highest share in several years at 19%, while conforming was below 49% for the second consecutive month. A spike in non-conforming loans usually means that home prices are high and buyers are forced to take out jumbo loans that exceed standard conforming limits.
Alternatively, buyers could be relying more on government-back programs with smaller down payments, all to navigate a less-than-ideal rate environment. Affordability remains a concern with rising
The secondary market prioritizing safety over profit
Mortgage lenders are changing how they sell their loans to investors behind the scenes. Agency mortgage backed security executions are down for the second consecutive month to 40% due in part to
In contrast, best-efforts activity increased to 3% and while that is a small amount, the increase highlights that lenders are more comfortable with the investor taking on a greater share of the risk.
"Lenders are evaluating all potential loan sale options, and best efforts-mandatory pricing spreads moved in opposite directions for conventional and government loans. It shows lenders must continue to evaluate execution opportunities on a product-by-product basis," said Vough.
Lenders are now operating in a highly fragmented market. Conventional 30-year spreads tightened to 31 bps, making it more attractive for lenders. In contrast, government 30-year spreads widened to 18 bps.
Mortgage servicing rights declined to 1.33% in June. When the market suspects interest rates might drop, the MSR usually goes down because homeowners are more likely to refinance and the company holding the MSR loses their steady stream of servicing fees.
