Mortgage refi demand soared in July, growing to levels unseen in nearly two years, according to Optimal Blue.

The company’s latest Market Advantage mortgage data report showed that refinance activity rose to 17% of total mortgage rate lock volume in July. That’s up 81 basis points from June and a whopping 472 basis points from July 2023. July’s market share for refinances is the highest percentage since September 2022, with the mortgage rates for the two months — 6.67% in July 2024, 6.68% in September 2022  — mirroring each other nearly identically.

“The July report shows a notable uptick in refinance activity, particularly rate-and-term refinances, which jumped 12% as borrowers responded to declining interest rates,” said Brennan O’Connell, director of data solutions at Optimal Blue. “The drop in the Optimal Blue Mortgage Market Indices 30-year conforming rate to 6.67% played a significant role in this growth, and we observed the highest level of refinance activity since September 2022.”

Cash-out finances were up, too, growing 5.9% from June. Overall rate lock volume was up by 3.5% month over month. The big shifts reflect further rate sensitivity from buyers clamoring for affordability; the 30-year conforming mortgage rate at the end of July was down 26 basis points from one month prior.

July’s loan mix trended toward agency production, with conforming loans growing to 56.1% of the total loan mix (an uptick of 18 bps). The influx of affordability from lower rates spurred FHA activity, which rose to 19.0% (up 61 bps) in market share. Meanwhile, non-conforming loans, including jumbo and non-QM loans, dropped in share, sliding to 12.4% (down 107 bps).