MCT: August Lock Volume Pulls Back as Fed Rate Hike Bets Build

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MCT, San Diego, reported that lock volume fell in August, with purchase and rate/term refinances both pulling back.

Cash-out refinances were the lone category to move higher, the firm’s September Lock Volume Indices report said.

MCT said total lock volume declined 4.14% month over month in August, with purchase locks down 4.67% and rate/term refinances falling 11.66%. Cash-out refinances rose 4.76% on the month. Year over year, total volume was down 6.02%, purchase declined a more modest 2.71% and rate/term refinances remained off sharply at 35.84% below the prior year.

“If I needed cash right now, I would look at a HELOC before I would do a cash-out refinance,” said Andrew Rhodes, head of trading at MCT. “The fact that cash out is the one category moving higher tells you people may be reaching for a lump sum to get through today, with the hope of refinancing into a lower rate down the road.”

The report arrived in the middle of a pivotal week for rates, with market-implied odds of a Fed rate increase at Wednesday’s meeting shifting fast. “The one-day, one-week, one-month lookback on this is a wild shift,” Rhodes noted.