Buyers Hope To Benefit From Slow Winter Months

Though winter is usually a slow time in the mortgage industry, demand is on the rise this January as increased inventory keeps buyers in the market.

Typically, cold winter temperatures keep potential buyers sidelined in the early months of the year. Plus, kids are still in school, making it a complicated moment to upend everything and move.

Less competition leads to lower costs as lenders try to stir up business. Buyers can also monopolize the attention of loan officers, getting more personalized service while customers are scarce.

This winter seems primed to upend that trend. Buyers who have been sitting on the sidelines find they can’t keep waiting to buy.

“Compared to this time last year, rates are elevated and the market’s affordability headwinds persist. However, buyers appear to be more inclined to get off the sidelines as pending home sales rise,” Freddie Mac’s Sam Khater recently commented.

Both purchase and refinance applications increased this week, despite rates rising to their highest point since May 2024.

December showed an increase in mortgage activity, with lock volume up 26% YOY, driven by an 18% increase in purchase locks, a 43% rise in cash-out refinances, and an 82% jump in rate-and-term refinances.

Brennan O’Connell, director of data solutions at Optimal Blue, said data like this illustrates how the market is adapting to shifting conditions and remaining resilient.

“It gives me confidence that, even in this rate environment, which isn’t really much better than it was a year ago, you’re seeing an improvement in purchase lending,” O’Connell told The Mortgage Note.

Historically, January and February are two of the most affordable months to take out a mortgage.

February has been the best month for low rates over the last 50 years, averaging 7.62% since 1972. The second and third best, notably, are January and December.