Lower rates drive best November lock activity in years

Optimal Blue's Market Volume Index, which tracks mortgage rate lock activity, fell below 100 in November for the first time since August, reflecting typical seasonal trends.

Still, aided by lower interest rates in the second half of the year, November marked the strongest reading for this metric since 2021, strong by any measure, said Mike Vough, senior vice president of corporate strategy, in a press release.

"November's data underscores a market still responding to rate relief even as seasonal patterns take hold," said Vough. "Refinances remain the clear standout, with rate-and-term activity running more than triple last year's levels and cash-outs continuing to outperform."

Refis made up 35% of November's rate locks. 

November's mortgage rate lock volume by purpose

November's MVI was 91, down 25% from October, but up 17% from the same month in 2024, the Market Advantage report said. For comparative purposes, the decline between October 2024 and November that year was also 25%.

The month-to-month drop in lock activity was across the board. Purchases were down 22%, and this was the only loan purpose lower year-over-year as well, by 5.7%. The purchase MVI was 59.

Rate-and-term refis, with an MVI of 21, the result of lower rates, was down 34% from October but 223% improved over November 2024.

Cash-out refis, which don't have as much rate sensitivity, was 19% lower versus last month. When compared with November 2024, its 11 MVI was 29% higher.

How rate lock activity shifted by investor type

By loan type, conforming rate locks were 52% of the market, lower by 98 basis points from October and 89 basis points from November 2024.

Meanwhile, industry observers have been pointing to growth in nonconforming product offerings in recent months. Rate locks for these loans had a 17% share, 34 basis points higher from the prior month and 210 basis points higher year-over-year.

Federal Housing Administration-insured mortgages made up 19% of rate locks, a gain of 104 basis points of market share over October but down by 164 basis points from one year prior.

Even though the November calendar features Veterans Day, the loan product designed for military families lost some share from October. Veterans Affairs loans made up 12% of rate locks, 47 basis points lower from one month earlier, but up 64 basis points versus 2024.

U.S. Department of Agriculture mortgages had a 0.4% share of locks, up 7 basis points month-to-month but 22 basis points lower from the previous year.

What exit strategy changes did lenders pursue in November

When it comes to secondary market exit strategies during November, cash window sales to Fannie Mae and Freddie Mac increased by 300 basis points during the month, a 25% share and blunting the momentum towards securitization activity.

The decline in share of loans delivered to the government-sponsored enterprises for securitization ended six months of higher volume. The MBS exit had a 45% share during November, down 100 basis points.

The share of mortgages sold to bulk aggregators (also known as the correspondent channel) dropped 300 basis points to 27%. Meanwhile best-efforts executions increased 100 basis points to 3%.

"Lenders moved to the cash window as securitization momentum moderated, and pricing spreads broadened as more loans moved out of the top tier," Vough said. "These shifts point to lenders fine-tuning execution to manage price and overall delivery profile as the market settles into late-year conditions."