Lower rates revived refinances even as other demand eased from recent highs
Mortgage activity inched higher in mid‑February as falling rates continued to tilt the market back toward refinancing, even while purchase demand stepped down from earlier weeks.
According to the Mortgage Bankers Association’s (MBA) latest weekly survey, total applications for the week ending Feb. 20 rose 0.4% on a seasonally adjusted basis, with the unadjusted index up 2% from the prior week.
Refinance applications increased 4% and were 150% above the same week a year earlier, while purchase applications fell 5% seasonally adjusted and 1% unadjusted, though they remained 12% higher than a year ago.
The MBA’s Market Composite Index, a leading gauge of mortgage activity since 1990, has reflected a gradual shift toward rate‑sensitive borrowers as mortgage costs have retreated from their 2023–24 peaks.
“Mortgage rates followed Treasury yields lower last week, with the 30-year fixed rate declining to 6.09 percent – its lowest level since September 2022. The decrease in rates was enough to drive a 5 percent increase in conventional refinance applications and a 26 percent increase in VA refinances,” Joel Kan, MBA’s vice president and deputy chief economist, said.
“Purchase applications were down over the week but were 12 percent higher than a year ago, as the combination of lower rates and improving affordability conditions continue to support stronger demand than last year,” Kan said.
“The ARM share stayed above 8 percent, as ARM rates remained more than 80 basis points below conforming fixed rates. This is giving payment-sensitive borrowers or those seeking larger loans an incentive to choose this product offering.”
Refi share climbs as government mix shifts
Refinances made up 58.6% of total applications, up from 57.4% the week before, underscoring how even modest rate moves have drawn in existing borrowers. The adjustable-rate mortgage share held at 8.2%.
Government program demand showed a mixed picture. FHA applications slipped to a 16.1% share from 18.4%, while VA’s share rose to 18.7%; USDA volume held at 0.4%.
Rates retreat but purchase demand stays cautious
Average contract rates broadly moved lower. The 30-year fixed rate for conforming loans fell to 6.09%, jumbos edged down to 6.20%, FHA 30‑year rates dipped to 5.97%, 15‑year fixed rates eased to 5.48%, and 5/1 ARMs declined to 5.23%.
Freddie Mac data showed national averages hovering just above 6%, reinforcing the MBA figures and extending a months‑long trend of rates holding near their lowest levels since late 2022.
For lenders and brokers, as long as rates hover around 6% and affordability remains stretched, the most resilient pipelines are likely to be those diversified across purchase, refi and ARM offerings, and closely attuned to weekly rate moves that could quickly open or close windows of borrower demand.
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