Loan mix is shifting

March mortgage locks shifted away from standard conforming loans and toward Federal Housing Administration and non-qualified mortgage channels. (scotsmanguide.com) Optimal Blue said total rate-lock volume rose 13% from February and 26% from March 2025, with purchase locks up 38% month over month. Conforming share fell to just over 50% of total volume in March, down from 52.6% in February. (optimalblue.com) Federal Housing Administration locks rose about 145 basis points to 18.5% of production share in March, and non-qualified mortgage locks rose by about the same amount to 17.9%. Department of Veterans Affairs locks moved the other way, slipping to 12.6% from 13.2% in February. (scotsmanguide.com) A conforming loan fits the underwriting rules set by Fannie Mae and Freddie Mac, which makes it easier to price, sell, and process at scale. A non-qualified mortgage sits outside that rulebook, often using alternative income documents such as bank statements or serving borrowers with more complex credit files. (consumerfinance.gov, scotsmanguide.com) That matters in a rising-rate market because borrowers who no longer fit clean agency boxes still need financing, especially first-time buyers and self-employed applicants. In the Mortgage Bankers Association’s weekly survey for the week ending March 20, the Federal Housing Administration share of applications rose to 19.7% while the 30-year conforming rate climbed to 6.43%. (mba.org) The spring market is still being carried by purchases, not refinances. Optimal Blue said refinances accounted for 28% of March lock volume, down from 41% in February, as the 30-year conforming fixed rate ended March at 6.35%, up 45 basis points over the month. (optimalblue.com, scotsmanguide.com) The non-qualified mortgage mix also changed inside that channel. Scotsman Guide reported investor loans held steady at about 32.3% of non-qualified mortgage production in March, while bank-statement loans fell to about 33.4% from 36% in February. (scotsmanguide.com) Outside the United States, the same rate pressure is showing up in buyer behavior. Connells Group said 83% of home movers in Great Britain agreed mortgage rates above 4% in March, up from 58% in February, while agreed sales fell 2% and new listings dropped 7% from a year earlier. (mortgagestrategy.co.uk) For lenders and loan-origination systems, a market with fewer plain-vanilla conforming files means more exceptions, more document review, and more manual judgment. March’s lock data shows that mix shift is no longer a side trend; it is now showing up in the core spring pipeline. (scotsmanguide.com, optimalblue.com))