The surge in homebuyer activity led to a decrease in the share of refinancing transactions to 41% of all locks, down from 44% in the previous month. Despite this, refinancing activity remained strong, with rate-and-term refinance locks increasing by 3% month over month and a staggering 280% compared to February 2025. Cash-out refinance volume also saw a 1% increase from January and a 34% increase from the previous year.
“February’s data indicates a more balanced market between purchase and refinance transactions as interest rates decreased,” stated Mike Vough, senior vice president of corporate strategy at Optimal Blue. “Purchase demand has picked up after a slow start to the year, but the share of refinancing transactions at 41% is still higher than any period between early 2022 and late last year.”
Mortgage rates decreased across various loan products in February. The 30-year conforming fixed rate, which serves as the benchmark for mortgage rate futures traded by CME Group, ended the month at 5.90%, a 17 basis point decrease from January.
Rates for jumbo loans and U.S. Department of Veterans Affairs (VA) mortgages both dropped by 11 basis points, while rates for Federal Housing Administration (FHA) products decreased by 13 basis points.
Additionally, the 10-year Treasury yield fell by almost 30 basis points to 3.97%. The spread between the 10-year Treasury and the OBMMI 30-year rate widened to 193 basis points, indicating that mortgage rates did not decline as rapidly as those in the broader bond market.
The report also highlighted changes in secondary market execution, with pricing spreads widening and delivery strategies evolving. Best-efforts-to-mandatory spreads expanded for conventional products, and there was a shift towards more hedged loan sales in the agency cash window.
“In this type of environment, lenders are closely monitoring their execution and risk management strategies,” Vough explained. “There is a focus on active positioning across delivery channels and servicing assets as lenders balance short-term pricing with long-term portfolio value.”
Refinancing transactions represented 41% of lock volume in February, while purchase loans rebounded from a slower start to the year. Conforming loans accounted for 53% of total locks, with nonconforming loans making up 16%. FHA loans comprised 17%, VA loans 13%, and U.S. Department of Agriculture (USDA) loans 1%.
Adjustable-rate mortgages (ARMs) saw an increase in popularity, rising to 10% of total lock volume from 6.9% the previous year.
The average loan amount continued to rise, reaching $404,586 in February, up from $400,667 in January. This marked the first time the average loan amount exceeded $400,000 for two consecutive months. The national average loan-to-value ratio stood at 80.32%.
Despite the decline in benchmark mortgage rates, the values of mortgage servicing rights (MSRs) for conforming 30-year loans saw a slight increase of 2 basis points to 1.18% during the month.
Regional loan sizes varied significantly, ranging from $875,787 in the San Francisco Bay Area to $319,743 in San Antonio, as reported in the study.