MCT: 17% Increase in Lock Volume Amid Mounting Tariff Concerns, Low Consumer Confidence
(Illustration: MCT)
Mortgage lock volume increased 17% in March compared to the previous month, Mortgage Capital Trading reported Monday.
MCT noted the increase in lock volume compared to February indicates that early-season homebuying continues to show strength. Rate/term refinance activity also jumped, up 95.71% year-over-year, reflecting a shift in borrower behavior and a possible return to more normalized mortgage activity.
The volume growth comes as mounting tariff concerns and weakening consumer data raise the risk of a recession heading into the second half of 2025.
“We’re seeing a front-loaded spring market again this year, similar to 2024, with pipelines starting to thin by mid-April, however, 2025 could prove to be different if rates come down.” said Andrew Rhodes, Senior Director and Head of Trading at MCT. “What’s different now is the level of uncertainty surrounding the broader economy. New tariffs, consumer hesitancy, and inflation concerns are all feeding recession fears heading into the second half of the year.”
Rhodes noted the size and scope of recently announced tariffs by the Trump administration are contributing to recessionary anxiety and inflationary pressures. The broader market is now paying close attention to data signals that could prompt action from the Federal Reserve. He pointed to recent fluctuations in the GDPNow, which is currently showing a negative print for Q1 2025.
“If Q1 GDP comes in negative, recession fears will start to play a larger role in conversations,” Rhodes said. “The Fed is in a tough spot. Juggling inflation concerns driven by tariffs while they try to support growth.”
The 95.71% year over year increase in rate/term refinances reflects a market that may be returning to historical patterns, where modest rate movements create refinance opportunities for a broader pool of borrowers.
“We could be seeing borrowers taking advantage of updated conforming loan limits, refinancing out of non-QM products, or restructuring their loans to remove mortgage insurance if their LTV has dropped below 80%,” Rhodes said.
Looking ahead, Rhodes noted that supply constraints and rising costs in home construction are likely to maintain upward pressure on home values, potentially discouraging new buyers from entering the market. “If you’re a forward-looking consumer and you’re watching the cost of goods and housing climb, you might make the conservative choice to rent for now,” he said. “It would take a significant market shift, likely a recession, job losses, and delinquencies to see meaningful price corrections in the housing market, which I don’t think any of us want to see.”
