Real Estate News & Market Insights:
- Optimal Blue's OBMMI 30-year fixed rate fell to 5.90%, down 17 basis points from January.
- The 10-year Treasury dropped to 3.97%, widening the spread with mortgage rates to 193 basis points.
- Pricing spreads widened; best-efforts-to-mandatory spreads increased and more hedged loan sales shifted toward the agency cash window.
- ARMs gained share, rising to 10% of locks, while conforming loans represented 53% of total locks.
- Average loan size reached $404,586; mortgage servicing rights for conforming 30-year loans rose slightly to 1.18%.
The increase in purchase activity pushed down the refinance share of activity to 41% of all locks, compared with 44% the month prior. Still, refinancing remained elevated, with rate-and-term refi locks rising 3% month over month and 280% compared to February 2025. Cash-out refi volume increased 1% from January and 34% from a year earlier.
“February’s data shows the market settling into a healthier balance between purchase and refinance activity as rates moved lower,” 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 refinance share is still running at 41%, which is higher than anything we saw between early 2022 and late last year.”
Mortgage rates declined across major loan products during the month. The Optimal Blue Mortgage Market Indices’ (OBMMI) 30-year conforming fixed rate — the benchmark for mortgage rate futures traded by CME Group — ended February at 5.90%, down 17 basis points from January.
Rates for jumbo loans and U.S. Department of Veterans Affairs (VA) mortgages each fell by 11 bps, while rates for Federal Housing Administration (FHA) products declined 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 OBMMI 30-year rate widened to 193 bps, indicating that mortgage rates did not fall as quickly as those in the broader bond market.
The report also showed shifts in secondary market execution as pricing spreads widened and delivery strategies evolved. Best-efforts-to-mandatory spreads widened for conventional products, while more hedged loan sales moved toward the agency cash window.
“In an environment like this, lenders are paying close attention to how they execute and manage risk,” Vough said. “We’re seeing more active positioning across delivery channels and servicing assets as lenders balance near-term pricing with longer-term portfolio value.”
Refinances accounted for 41% of February lock volume, while purchase loans rebounded following a slower start to the year. Conforming loans represented 53% of total locks, with nonconforming loans accounting for 16%. FHA loans made up 17%, VA loans 13% and U.S. Department of Agriculture (USDA) loans 1%.
Adjustable-rate mortgages (ARMs) also gained traction, rising to 10% of total lock volume, up from 6.9% a year earlier.
Average loan amounts continued to climb. 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 (MSRs) values for conforming 30-year loans rose slightly during the month, increasing 2 basis points to 1.18%, even as benchmark mortgage rates declined.
Regional loan sizes varied widely, ranging from $875,787 in the San Francisco Bay Area to $319,743 in San Antonio, according to the report.
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