Optimal Blue data shows non-QM lending, ARM usage is expanding

Nonqualified mortgage (non-QM) lending continued to expand in September as rising mortgage rates weighed on broader origination activity, according to Optimal Blue’s newest Market Advantage report, released on Tuesday. Non-QM rate-lock volume increased 8% from August, while total mortgage rate-lock volume fell 2% month over month and 26% year over year. Non-QM loans accounted for 12% of September production, up from the previous month and a year earlier. Overall, total rate-lock volume declined 21% over the past three months as mortgage rates climbed across major loan products. The 30-year conforming fixed mortgage rate tracked by Optimal Blue’s Mortgage Market Indices ended September at 7.39%, up 67 basis points from August and 107 basis points from a year earlier. The 30-year jumbo rate ended the month at 7.36%, while Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) loan rates reached 7.10% and 7.08%, respectively. “What stands out in September is how much product mix is doing the work of keeping purchase activity moving,” said Brennan O’Connell, director of data solutions at Optimal Blue. “Conforming lost share while non-QM volume grew and ARM usage r...