Rate-and-Term Refis Drove February Mortgage Lock Volumes

Rate-and-term refinances enjoyed a significant boost in February as rates moderated, though purchase demand remains depressed.

Optimal Blue reported that mortgage lock volume increased by 7% on the month, driven by a refinance push.

Rate-and-terms were up nearly 40% as homeowners jumped at the chance to lower their monthly payments with a lower interest rate. Cash-out refinances also inched up by 4%.

Purchase activity remained stifled, however, as high homebuying costs deterred buyers despite cooling rates. Purchase locks were down 9% YOY.

“Interest rate improvement, while marginal, is attracting refinance activity as homeowners who bought at higher rates work the numbers and find they can reduce their monthly payments or tap into home equity,” said Brennan O’Connell, director of data solutions at Optimal Blue. 

“The upcoming homebuying season will reveal whether purchase demand is poised for a rebound or if elevated rates will continue to keep buyers on the sidelines.”

Rates averaged 6.76% last week, their lowest point since September 2024 and the seventh straight week of declines.

But home prices are still historically high, and buyers in states subject to increasing natural disasters are battling tough insurance markets.

Even affluent Americans are choosing to rent rather than buy, with 35 of the 50 largest U.S. metros seeing a significant increase in high-wealth renters since 2019.

“With mortgage rates near 7%, renting frees up cash for other investments that may be more lucrative than real estate,” Redfin Senior Economist Elijah de la Campa said of the trend.