Mortgage rate-lock volume rises in December as refinances surge

"Cash-out refinances increased by 1% from November and were up 35% year over year. Purchase lock activity slipped 1% from November but ended December 7% higher than a year earlier. Finishing the year with higher lock volume in December is a clear signal that borrower demand has adjusted to today's rate environment, Mike Vough, senior vice president of corporate strategy at Optimal Blue,"

"Refinance activity continues to do the heavy lifting, but the fact that purchase volume held essentially flat month over month and finished the year higher than last December speaks to a market that is more durable than many expected. Optimal Blue observed that lenders adjusted secondary market strategies as pricing dynamics evolved. Best efforts to mandatory spreads widened across products, bulk aggregator execution regained share and mortgage servicing rights (MSRs) values increased despite largely flat primary mortgage rates."

"December's secondary data shows lenders actively recalibrating execution as spreads widened and pricing discipline remained tight, Vough said. The shift back toward bulk aggregation, combined with stable top-tier pricing and rising MSR values, reflects investor demand that is focused on end-of-year balance sheet management and long-term value as we head into 2026. Refinances accounted for 37% of all locks in December, up 224 basis points (bps) from November and 1,354 bps from a year earlier. The refinance pull-through rate improved to 69.2%."

Cash-out refinances rose 1% from November and 35% year over year, while purchase locks slipped 1% month over month but finished December 7% higher year over year. Refinances made up 37% of locks, up 224 basis points from November and 1,354 bps year over year, with a refinance pull-through of 69.2% and purchase pull-through at 85.7%. Lenders widened best-efforts to mandatory spreads, shifted execution back toward bulk aggregation, and saw MSR values increase despite largely flat primary mortgage rates. Non-QM production exceeded 9% of locks; conforming loans were 51% and nonconforming 17%. FHA, VA and USDA loans each gained share, and planned unit developments accounted for 29% of locks. Investors focused on end-of-year balance sheet management and long-term value heading into 2026.

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