This week’s Optimal Insights podcast focused on a familiar but evolving challenge for the mortgage market. Geopolitical pressures and energy prices continue to influence inflation and rates, while new labor data and early spring lending activity offer mixed signals about momentum heading into the second quarter.
Hosted by Jim Glennon, the episode featured market commentary from Alex Hebner and James Cahill, followed by a preview of March findings from the Market Advantage Report with Brennan O’Connell and Mike Vough. Together, the discussion connected macro uncertainty with what lenders are seeing across origination and secondary markets.
Here’s what you need to know this week.
Markets remain sensitive to geopolitical developments and energy-driven inflation risks, while mortgage activity shows signs of resilience despite higher rates. Labor data, inflation readings, and capital markets dynamics are all contributing to a cautious but active environment.
Key Market Insights and Trends
Mortgage rates remain elevated and range-bound
Jim noted that the OBMMI 30-year conventional rate has been holding between roughly 6.3 and 6.5 percent, while the 10-year Treasury has traded in a similar range relative to recent weeks. Rates are not where the industry would like them to be, but they have remained relatively stable in the short term.
Jobs data surprised, but revisions remain important
James explained that the March non-farm payroll report exceeded expectations, pushing unemployment down to 4.3 percent. At the same time, February payrolls were revised lower, reinforcing the importance of watching how these numbers settle over time. Both he and Alex suggested the labor market still appears soft when viewed on an average basis.
Rate hike expectations eased following employment data
James noted that earlier in the year, markets briefly priced in a higher probability of a rate hike. After the latest employment report, he said that probability declined, with expectations shifting toward rates remaining steady for the foreseeable future. Alex added that the forward rate path currently appears relatively flat if conditions remain unchanged.
Energy prices continue to complicate the inflation outlook
The team discussed rising oil and gas prices, with James pointing out that energy costs have increased meaningfully since late February. Alex added that geopolitical conditions are not helping inflation readings and that upcoming CPI data, particularly noncore components, could be closely watched by markets.
March Market Advantage Preview
The main segment for this week’s episode focused on early insights from the March Market Advantage data report, offering a look at how lenders and investors are navigating rate volatility as the spring selling season begins.
Origination activity showed resilience
Brennan shared that total lock volume increased 13 percent month-over-month and 26 percent year-over-year. Purchase activity led the growth, rising 38 percent from February and accounting for 71 percent of total production. The team noted that purchase demand tends to be more stable and less rate-sensitive, which may be supporting volume despite higher rates.
Refinance activity remained mixed
Cash-out refinance volume increased modestly, while rate-term refinances declined as rates moved higher through March. Refinance share fell to just under 30 percent, reflecting ongoing sensitivity to rate changes.
Borrower mix and affordability indicators
First-time homebuyers represented 46 percent of conforming purchase volume, while FHA and VA lending continued to serve a high share of first-time buyers. Debt-to-income ratios remained relatively stable across loan types, which the team described as an encouraging sign for affordability.
Product trends and secondary market dynamics
Brennan noted that ARM usage rose to roughly 12 percent, the highest level since late 2022, while non-QM lending appeared to plateau around 8 percent.
On the secondary side, Mike discussed expanded specified payups for certain loan-balance tiers, increasing the share of loans eligible for payups across hedge pipelines. He also highlighted rising MSR values, increased use of the agency cash window, and continued emphasis on best execution in loan sales.
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Practical Actions You Can Take This Week
Monitor CPI and PCE releases, with attention to energy-related components
Stay disciplined with pipeline and hedging posture amid geopolitical uncertainty
Evaluate purchase-focused strategies as spring activity develops
Review secondary execution options, including specified pool eligibility and cash window trends
Track ARM and non-QM usage as borrower preferences adjust to the rate environment
This episode highlighted a mortgage market balancing macro uncertainty with steady operational execution. While rates remain elevated and energy pressures persist, early spring data suggests lenders and borrowers are adapting. The coming weeks of inflation data, labor revisions, and geopolitical developments may play an important role in shaping expectations for the rest of the quarter.
For a deeper dive into the discussion, listen to the full episode of Optimal Insights. Available on all major podcast platforms: https://optimal-insights.captivate.fm/listen
The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Optimal Blue, LLC.