Refinancing gained momentum in February as month-over-month mortgage lock volume increased by 7%, according to a report from Optimal Blue.  

Refinancing was the main catalyst for the higher mortgage activity, with rate-and-term refinancing jumping nearly 40% for the month as homeowners were attracted by lower monthly mortgage rates. The conforming mortgage rate at the end of February stood at 6.6%. Cash-out refinancing also rose 4% in February, while purchase lock activity remained subdued for the second month in a row.

Some of the key findings in the report include purchase activity remained low for the second straight month, with volume down 5% year over year. Purchase lock counts, which control the home price appreciation, were down 9% from the same time in 2024. Refinancing accounted for 22% of mortgage activity for the month, while home purchase mortgages made up 78%.

The mortgage rate spread to the 10-year Treasury hovered just above 230 basis points, roughly 30 basis points better than the same time last year, but still about 30 to 40 basis points above the long-term average.

Optimal Blue also found that the average credit score for cash-out rose two points to 695 and rate-and-term refinances rose by four points to 732. The average purchase credit score was flat at 737. The average home purchase price rose to $480,200 in February from $476,200 in January. The average loan amount rose to $380,500, from $376,400 in January.  

“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.”