Lower mortgage rates and less disruptive winter conditions last month fueled a modest increase in homebuyer activity as mortgage purchase rate locks rose 5% over the year and 14% from January.
Overall rate lock volumes were 40% higher over the year and 9% over the month in February, according to Optimal Blue, a mortgage loan hedging and analytics platform. Refinance volumes remained an elevated share of overall mortgage rate-lock activity in February but fell from a 44% share in January to 41% last month.
A rate lock is an agreement between a borrower and a lender that the interest rate on a loan will remain fixed during the loan processing period. Optimal Blue noted in its latest monthly market performance report, released Tuesday, that its rate-lock data represents about 35% of all mortgage transactions nationwide.
The typical rate for a 30-year fixed-rate mortgage with a conforming loan balance that would be eligible for Fannie Mae or Freddie Mac financing ended February at 5.9%, according to Optimal Blue’s indexes, down 0.17% from the previous month and 0.7% from a year ago.
While the 30-year mortgage to 10-year Treasury yield spread widened by 13 basis points from January to February, that spread which benchmarks mortgage rates remained 43 basis points lower over the previous 12 months at 1.93%.
Both rate-and-term refinances and cash-out refi activity increased in February as mortgage rates sustained easing under an important 6% threshold, increasing 3% yearly and 1% monthly as the average loan amount rose from $400,667 to $404,586.
Conforming mortgage rate lock share was 52.6%, while nonconforming share came in around 16.4% in February. Share of locks for loans insured by the Federal Housing Administration (FHA) was more than 3% lower over the year at 17.1%, a slide of 0.26% over the month. The share of loans backed by the Department of Veterans Affairs (VA) was 1.6% higher than a year ago at 13.2%.
Among first-time homebuyers, FHA loans comprised 70% of February purchase rate locks, flat over the month and down just 1% from a year ago. Conforming loans backed by Fannie Mae and Freddie Mac made up 46% of first-time homebuyer share, while VA share was 48%.
Debt-to-income (DTI) ratios started the year in a narrow range, as affordability remains a top challenge for prospective homebuyers in 2026. Average DTIs were 36.2% for conforming rate locks and 43.5% for FHA rate locks in February. Each were down 0.1% over the month and posted respective yearly declines of 1% and 1.6%.
Refinance pull-through rates spiked to 73.5% in February, an increase of more than 10% over the month and 15% over the year. Securitization share by Fannie Mae and Freddie Mac shrank to 42% of hedged executions in February, down from 47% in January as more lenders settled loans for cash last month.
