Optimal Blue Reports 40% Jump For Rate-and-term Refis

Optimal Blue‘s February 2025 Market Advantage mortgage data report, released Tuesday, showcased a 7% month-over-month increase in mortgage lock volume, which the company said was primarily driven by a surge in refinance activity.

Rate-and-term refinances saw the biggest jump, rising nearly 40% compared to January as homeowners jumped on the opportunity to lower their monthly payments. Cash-out refinances also saw higher numbers while purchase lock activity remained subdued for the second consecutive month, with volume down 5% on a year-over-year basis.

Purchase lock counts, which control for home-price appreciation, were down 9% on an annualized basis.

“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,” Brennan O’Connell, director of data solutions at Optimal Blue, said in a statement.

“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.”

After hitting a multiyear low in December, conforming loan volume continued to edge higher for a second straight month, reaching 52% of total lock volume. The Federal Housing Administration (FHA) share remained just above 20%, while the Department of Veterans Affairs (VA) share grew slightly to 11.5%. Non-conforming loan volume — which includes jumbo and non-QM loans — was flat at a share of 15.5%.

Optimal Blue reported that the mortgage rate spread with the 10-year Treasury hovered just above 230 basis points. This figure is a 30 basis-point improvement from February 2024 but still about 30 to 40 bps above the long-term average.

Other key findings include the average credit score for cash-out and rate-and-term refinances rising by 2 and 4 points, respectively, to 695 and 732. The average purchase credit score was flat at 737.

Home prices and loan amounts also rose, with the average home purchase price increasing from $476,200 in January to $480,200 in February. This drove a month-over-month increase in the average loan amount, from $376,400 to $380,500.

At the metro level, New York City led the way with 4.6% of lock volume in February, although this was down 5.3% from the prior month. Washington, D.C., which represented 3.6% of lock volume, which was up 15.9% month over month.