Rate lock dollar volumes were up 43 percent month over month nationwide in March, driven by seasonal tailwinds, falling interest rates and stronger purchase market performance according to a new report from real estate data company Black Knight.

Uncertainty in the banking sector triggered downward movement in interest rates on 30-year, fixed-rate loans, which finished March at 6.4 percent, down 28 basis points from the start of the month.

“This continues to be an incredibly rate-sensitive housing market, and March’s rate lock activity perfectly illustrates this dynamic,” Andy Walden, vice president of enterprise research at Black Knight said in a statement accompanying the report. “Early in the month, when rates started their climb back toward 7% – reaching 6.8% in the process – we saw pronounced downward pressure on originations. In the wake of uncertainty in the banking sector and investors’ flight to the safe haven of U.S. Treasuries, rates came down roughly a quarter of a point. The result? Another quick surge in originations, particularly in the purchase market.”

Black Knight data showed purchase locks rising 44 percent, cash-out refinances up 31 percent and even rate/term refis, which had been hovering near historic lows, up 36 percent. Despite the rebound, refinance locks fell to just 13 percent of the month’s activity, a new low for this cycle. FHA lock volume captured additional market share, accounting for 20 percent of the March pipeline, up from 18 percent at the beginning of the year and 12 percent a year earlier.

Still, purchase lock counts – which exclude the impact of home price changes – remained 37 percent below both last year’s level and 12 percent below where those counts were in March 2019.

“It is not unusual for rate locks to surge in March ahead of the spring homebuying season, although this year’s rise outpaced what we typically see on a seasonal basis,” Walden said. “A cooling market lacking the multiple bids and all-cash offers of the recent past has made sellers more receptive to FHA offers. That, combined with a recent reduction in FHA mortgage insurance premiums and a mid-month increase in the FHA-to-conforming spread, made FHA loans comparatively more attractive. FHA share increased to more than 20% of the pipeline in March, up from 18% at the beginning of the year and 12% a year ago.”