Lock volume sinks as high mortgage rates crush refinancing activity

Mortgage rates popped back up to 7% in the aftermath of the new global tariff regime announced by President Donald Trump on April 2, as it tanked stock markets, the bond market and the dollar all at once.

Most of those tariffs have since been paused or reduced until July, and stock markets have largely regained the ground lost from the initial collapse. But the negative impact on rates has remained and doesn’t appear to be budging.

Elevated mortgage rates kept purchase lock counts flat compared to April, but it’s down 10% year over year. The rise in rates also pushed the share of loans toward conforming loans and away from loans issued by the Federal Housing Administration (FHA).

Numbers are down across the board on a month-over-month basis. The volume index for rate refinance dropped 44.4%. Of the largest 20 metropolitan areas, only Baltimore (0.1%) was up compared to April.

The largest declines in lock volume among the other metros are Charlotte (14.8%), Austin (14%), Tampa (12.9%), Denver (12.2%) and Phoenix (11.2%).

Other highlights in the report include the share of adjustable-rate mortgages fell from 10.3% in April to 9.11%. Credit scores remained flat, and low amounts dipped marginally to $386,460. Non-QM lending continues to inch higher, with the share hitting 7.36%.

Lending volume faces numerous headwinds other than high mortgage rates, as economic uncertainty related to trade policy is giving prospective homebuyers pause. Consumer confidence has tanked and a recent Redfin survey indicated that 56% of respondents have either canceled or paused searches for large purchases.

Fannie Mae’s Home Purchase Sentiment Index (HPSI) rose 4.3 points in May, but it remains below pre-pandemic levels, and only 26% of respondents said it’s a good time to buy a home.