Though new foreclosure proceedings rose 6.5% over the month to land 5.5% higher on a yearly basis in February, total mortgage originations climbed to multiyear highs to close out last year, fueled by borrowing costs that declined to multiyear lows, new figures show.
Servicing retention also surged in the fourth quarter of 2025 as lenders recaptured previous borrowers at their highest rate since 2014, according to ICE Mortgage Technology, a subsidiary of Intercontinental Exchange Inc., which released its monthly performance report on Monday. Servicers retained one in three refinancing borrowers.
“The fourth quarter marked a meaningful inflection point for mortgage market activity,” said Andy Walden, head of mortgage and housing market research at ICE, noting in a press release that refinancing was about 40% of lending share in the last three months of 2025.
Lenders have suffered from consecutive years of low purchase mortgage production amid a severe lack of homebuying affordability. But a majority of mortgaged homeowners have loans with interest rates still 2% to 3% lower than current levels for 30-year fixed-rate mortgages, leaving refinancing opportunities limited until the last half of 2025.
A ‘meaningful inflection point’
As markets last August began to price in a highly anticipated first interest rate cut of the year — which Federal Reserve policymakers subsequently delivered in September — mortgage rates moved a leg lower and triggered the first meaningful refinance wave since borrowing costs first spiraled upward in 2022.
The growth of refinance volumes that continued from the fourth quarter through most of the first quarter of 2026 has exhibited that pattern of splashy refinance activity amid a slow grind for hard-won purchase loans for typical lenders and brokers.
Still, the announcement of $200 billion in secondary market liquidity from Fannie Mae and Freddie Mac tightened secondary spreads in January, briefly pushing mortgage rates just below 6% as the market flashed another refinance smile. As home purchase affordability neared a four-year high in February by ICE’s measure, the pool of refinance-eligible borrowers who could lower their current mortgage rate by at least 0.75% swelled to 5.4 million, the largest since early 2022.
Global energy market shockwaves from the U.S. war with Iran and spiking yields on 10-year U.S. Treasury bonds have pushed mortgage rates well above 6% in the first 10 days or so of March. However, the 30-year mortgage to 10-year Treasury yield spread, which benchmarks mortgage rates for lenders and investors, ended a second consecutive month in February under 200 basis points for the first period since the Federal Reserve stopped purchasing mortgage-backed securities in 2022.
The national delinquency rate fell three basis points to 3.65% in January, still 15 basis points lower than its January 2020 benchmark. More than 850,000 borrowers were more than 90 days past due or in active foreclosure in January, up 104,000 from a year ago and representing the highest level since mid-2018, excluding the immediate aftermath of the pandemic.
Steady rates, soft home prices
Consistent affordability gains were the backdrop of the overall rising loan volumes that lenders have reported over the latter part of 2025 and start of 2026.
ICE’s mortgage report for February indicates that the typical monthly payment required to buy the average-priced home with a 30-year fixed-rate mortgage and a 20% downpayment was $2,063 as of late February, which is 8% lower year over year.
Despite increasing in January to around $2,070 after six straight months of improvement, average new mortgage payments were 6.1% lower over the year in January, according to Mortgage Bankers Association (MBA) data.
“That payment equals 27.4% of median household income — still roughly 4 percentage points above its 30-year average, but the most affordable reading in nearly four years,” the ICE report stated. Payment inflation since the pre-pandemic era has not been distributed equally, however.
From December 2019 to December 2025, the property insurance portion of monthly mortgage payments has risen 71.8% compared to 31.2% growth in the property tax portion, 34.8% growth in the interest portion and 22% growth in principal. Total payments are 33.1% higher over that six-year period.
With mortgage rates back above 6% and the MBA recently reaffirming its forecast of 6% to 6.5% rates over the rest of the year, affordability gains are largely expected to be made on the home-price front.
ICE reported that in February slightly more than 40% of major markets observed price declines from a year ago — the largest such share since mid-2012. Meanwhile, more than 70% of major markets posted yearly price growth deceleration over the past three months.
That trend began last year and accelerated through the fall, with the Federal Housing Finance Agency reporting that nine states posted year-over-year home price declines in the fourth quarter, up from just one state over that three-month period the year before.
