Increased buying activity reduced the share of refinancing to 41% of all locks, compared to 44% last month. Nevertheless, refinancing remained high, with average and term refi keys up 3% month-on-month and 280% compared to February 2025. Refi issuance volume increased 1% from January and 34% from last year.
“February’s data shows that the market is reaching a balance between buying and refinancing as prices decline,” said Mike Vough, senior vice president of Corporate Strategy at Optimal Blue, in a statement. “Demand to buy has returned after a slow start to the year, but the share of refinancing is still running at 41%, which is higher than anything we saw at the start of 2022 and at the end of last year.”
Loan rates fell across all major loan products during the month. Optimal Blue Mortgage Market Indices’ (OBMMI) 30-year fixed-rate benchmark – a market indicator of future mortgage rates The CME Group – ended February at 5.90%, down 17 points from January.
Jumbo loan rates and US Department of Veterans Affairs (VA) individual mortgages decreased by 11 bps, while rates Federal Housing Administration (FHA) products fell by 13 bps.
Meanwhile, the 10-year Treasury yield fell nearly 30 bps to 3.97%. The spread between the 10-year Treasury and the 30-year OBMMI rate widened to 193 bps, indicating that mortgage rates are not falling as quickly as those in the broader bond market.
The report also showed changes in the performance of the secondary market as price spreads widened and delivery strategies evolved. The spread of best enforcement efforts has been extended to conventional products, while the sale of more hedged loans has moved to the agency’s cash window.
“In a situation like this, lenders pay more attention to how they act and manage risk,” Vugh said. “We are seeing increased performance across delivery channels and servicing assets as lenders balance near-term pricing with long-term portfolio value.”
Loans accounted for 41% of February’s closing volume, while purchase loans rebounded following a slow start to the year. Conforming loans represent 53% of total foreclosures, while non-conforming loans account for 16%. FHA loans made up 17%, VA loans made up 13% as well US Department of Agriculture (USDA) loans 1%.
Adjustable-rate mortgages (ARMs) also gained strength, rising to 10% of foreclosure volume, up from 6.9% a year earlier.
Average mortgage rates continued to rise. The national average loan size increased to $404,586 in February, from $400,667 in January, marking the first time the average has remained above $400,000 in consecutive months. The national average for mortgage lending was 80.32%.
Mortgage servicing rights (MSRs) rates for 30-year loans rose slightly during the month, increasing 2 basis points to 1.18%, even as mortgage rates fell.
District loan sizes varied widely, from $875,787 in the San Francisco Bay Area to $319,743 in San Antonio, according to the report.
