According to HousingWire's report on Optimal Blue's August 2026 data, mortgage rate locks took a step backward last month. Total lock volume dropped 9% from July and 3% compared to August of the previous year, even though mortgage rates themselves stayed relatively flat. This tells me that stability in rates alone wasn't enough to spark borrower activity.
The purchase side of the market showed mixed signals. Purchase locks fell 10% month over month, though they remained 6% ahead of where they were a year ago. Purchases made up about 81% of all lock volume, which means they're still carrying most of the market's weight. The refinance market, on the other hand, continues to struggle badly, with rate-and-term refinances down nearly half compared to a year earlier.
Looking at the numbers from Optimal Blue's perspective, the 30-year fixed conforming rate ended August at 6.72%, unchanged from July but notably higher than a year ago. The report's director of data solutions pointed out that while rates stabilized after a sharp July move, borrowers didn't respond with increased activity. The bigger picture shows that with rates still elevated, buyers and sellers remain very sensitive to even small changes in borrowing costs.
The loan composition shifted in August as well. Conforming loans made up 47% of production, down from July and significantly lower than a year earlier. Meanwhile, FHA loans gained ground, rising to nearly 20% of production. Non-QM loans, which serve borrowers with less traditional financial profiles, continued growing and now represent more than 11% of total volume. The average locked loan amount declined to $388,000, suggesting that borrowers are being more conservative with their purchases.
Looking ahead, Optimal Blue's forecast suggests modest increases in rates over the next three months before some relief appears over the next year. Their analysis also highlighted an interesting disconnect in the secondary market, where lenders are hedging their bets in one direction while their actual loan production is spreading out across different rate coupons. This gap between where lenders are protecting themselves and where borrowers are actually landing is something worth monitoring.
What I am seeing locally in the Bay Area and East Bay is that this national data reflects our own market dynamics pretty closely. Buyers are still moving forward with purchases, but they're doing so deliberately, not frantically. The refinance market remains essentially dormant for homeowners looking to save on rate and term, and that's keeping overall transaction volume from really taking off. The shift toward more FHA and non-QM lending tells me that borrowers who don't fit traditional molds are finding paths forward, but the higher average credit scores show that overall, only stronger applicants are moving forward with homes right now.
