The increase in purchase activity reduced the share of refinance activity to 41% of all locks, compared to 44% the previous month. Still, refinancing remained elevated, with rate and term refinancing locks increasing 3% month over month and 280% compared to February 2025. Cash-out refinancing volume increased 1% from January and 34% year-over-year.
“February data shows the market is settling into a healthier balance between purchase and refinance activity as rates have declined,” Mike Vough, senior vice president of corporate strategy at Optimal Blue, said in a statement. “Purchase demand is back after a slow start to the year, but refinancing participation remains at 41%, which is higher than anything we’ve seen between early 2022 and the end of last year.”
Mortgage rates decreased on major credit products during the month. Optimal Blue Mortgage Market Indices (OBMMI) 30-year fixed rate, the benchmark for mortgage rate futures traded by CME Group – February ended at 5.90%, 17 basis points less than in January.
Rates for jumbo loans and US Department of Veterans Affairs (VA) mortgages each fell 11 bp, while rates for Federal Housing Administration (FHA) decreased 13 basis points.
Meanwhile, the 10-year Treasury yield fell nearly 30 basis points to 3.97%. The spread between the 10-year Treasury rate and the 30-year OBMMI rate widened to 193 bps, indicating that mortgage rates did not fall as rapidly as those of the broader bond market.
The report also showed changes in secondary market execution as price spreads widened and delivery strategies evolved. Spreads between best efforts and mandated widened for conventional products, while more sales of covered loans shifted to the agency cash window.
“In an environment like this, lenders are paying close attention to how they execute and manage risk,” Vough said. “We are seeing more active positioning in delivery channels and servicing assets as lenders balance short-term pricing with long-term portfolio value.”
Refinances accounted for 41% of February’s lock volume, while purchase loans rebounded after a slower start to the year. Conforming loans accounted for 53% of total blocks, while non-conforming loans accounted for 16%. FHA loans accounted for 17%, VA loans 13%, and US Department of Agriculture (USDA) loans 1%.
Adjustable rate mortgages (ARMs) also gained ground, reaching 10% of total lock volume, up from 6.9% a year earlier.
Average loan amounts continued to increase. The national average loan size increased to $404,586 in February, up from $400,667 in January, marking the first time the average has remained above $400,000 in consecutive months. The national average loan-to-value ratio was 80.32%.
Mortgage servicing rights (MSR) values for 30-year conforming loans rose slightly over the month, rising 2 basis points to 1.18%, even as benchmark mortgage rates declined.
Regional loan sizes varied widely, from $875,787 in the San Francisco Bay Area to $319,743 in San Antonio, according to the report.
