New data highlights year-over-year growth in mortgage activity, providing optimism for industry professionals as 2025 begins.

On Tuesday, Optimal Blue released its December 2024 Market Advantage mortgage report, showing that mortgage lock volume increased by 26% compared to the previous year. This rise was driven by an 18% increase in purchase locks, a 43% boost in cash-out refinances, and an 82% surge in rate-and-term refinances.

Market Resilience in a Shifting Landscape

Brennan O’Connell, Director of Data Solutions at Optimal Blue, noted that the market continues to adapt to changing conditions, demonstrating stability. In an interview with The Mortgage Note, he pointed out that mortgage rates in December remained similar to those at the end of 2023.

“It’s encouraging to see improvements in purchase lending despite interest rates not being significantly lower than a year ago,” O’Connell stated.

Trends in Loan Products

Looking at 2024 as a whole, O’Connell observed that market conditions were largely similar to 2023. However, a turning point came in the fall, when purchase lock counts began increasing on a year-over-year basis.

“We’ve been anticipating this shift since mortgage rates began climbing in 2022. Seeing purchase lock activity rise is a strong indication that the market may have reached its lowest point and is now trending upward,” O’Connell said.

Another notable trend is the change in the share of conforming loan products, which has dropped to 51%, the lowest level since Optimal Blue began tracking this data in January 2018. Meanwhile, FHA, VA, and non-conforming loans have gained market share. FHA locks rose to 21%, VA loans reached nearly 11.5%, and non-conforming loans increased to 16%.

“The shift in loan distribution reflects current affordability challenges,” O’Connell explained. “In a more difficult market, it’s expected that borrowers would turn to FHA loans, which offer more accessible financing options.”

Industry Insights and Outlook

Optimal Blue’s data is widely utilized by the Federal Reserve, investors, and economic analysts, though its primary audience remains mortgage professionals.

“Lenders and industry professionals rely on our data to stay informed about market trends. This knowledge allows them to guide borrowers effectively and provide expert advice on mortgage options,” O’Connell added.

Consumer Confidence in the Housing Market

Consumer sentiment is also showing signs of improvement. The Fannie Mae Home Purchase Sentiment Index recorded a slight decline of 1.9 points in December, bringing it to 73.1. However, the index remains 5.9 points higher compared to the previous year, signaling a gradual increase in consumer confidence.

As the market navigates ongoing economic conditions, these indicators suggest that 2025 could bring more stability and opportunities for both homebuyers and industry professionals.