Buy lending confirmed extra modest motion, rising 3% from December however remaining down 5% from a yr earlier. Optimal Blue stated this was attributable to a “slower response of buy demand to altering price circumstances early within the yr.”
Mortgage rates declined throughout most main merchandise in the course of the month. The Optimum Blue Mortgage Market Indices (OBMMI)’s 30-year conforming mounted price fell 7 foundation factors to six.07%. Jumbo charges declined 16 bps to six.25%, whereas U.S. Division of Veterans Affairs (VA) charges dropped 7 bps to five.64% and Federal Housing Administration (FHA) charges had been largely unchanged at 5.99%.
The common locked price on the Optimum Blue pricing engine fell under 6% for the primary time since August 2022.
“January’s information reveals simply how shortly refinance demand can reply when charges transfer decrease,” stated Mike Vough, senior vp of company technique at Optimum Blue. “It’s been greater than three years because the market final noticed common charges with a ‘5 deal with,’ and crossing again under that stage seems to have launched significant pent-up refinance demand.
“Buy exercise is responding extra steadily, which is typical this early within the yr, however the shift in borrower habits is obvious.”
On the secondary market aspect, the report discovered that lenders adjusted execution methods as pricing dynamics shifted and investor demand strengthened.
“January’s secondary market information displays lenders’ positioning early for a doubtlessly extra energetic origination setting,” Vough stated. “Pricing traits had been more and more tied to eligibility somewhat than outright value give-ups, and agency MBS securitization reached its largest share since 2024. In the meantime, rising MSR values and increasing investor participation level to a market targeted on flexibility and long-term execution technique as 2026 begins.”
Refinance exercise made up a bigger share of total quantity, whereas the nonqualified mortgage (non-QM) share declined to eight%, down 160 foundation factors from December however nonetheless 70 bps greater than a yr earlier. VA lending gained share, accounting for 14% of locks, up 125 bps month over month and 212 bps yr over yr.
When it comes to execution, lenders shifted extra quantity towards company mortgage-backed securities. Their securitization share elevated 300 foundation factors from December to 47%, its highest stage since 2024. Gross sales to bulk aggregators and cash-window executions every declined by 100 bps. The variety of energetic buyers elevated to 14, persevering with a development that started late final yr, Optimum Blue stated.
Borrower credit profiles improved throughout a number of classes. Common credit score scores rose for each cash-out and rate-and-term refinances elevated modestly throughout conforming, FHA and VA loans.
Affordability metrics additionally improved by 1 to 2 share factors over the previous yr, with buy debt-to-income ratios declining throughout all mortgage sorts. First-time homebuyers accounted for 45% of conforming buy loans and 70% of FHA loans in January.
Common mortgage quantities elevated to $400,667 in January, up from $394,502 in December. Mortgage sizes ranged from $868,498 within the Higher San Francisco space to $316,638 in San Antonio. Mortgage-to-value ratios ranged from 70.21% in Higher Los Angeles to 88.44% in San Antonio, with a nationwide common of 80.06%.
