A surge in refinance originations during the first three months of 2026 pushed the refinance share of total loan production to its highest level in roughly four years, boosting overall lending volumes as purchase demand remains sluggish amid a multiyear slowdown in home sales.
Lenders funded about 585,000 first-lien refinances totaling roughly $242 billion in the first quarter, up from $234 billion in the fourth quarter. First-quarter refinance production was more than double the refinance volume recorded one year ago, according to data released Monday by ICE Mortgage Technology, a servicing and market analytics platform.
Rate-and-term refinances comprised 60% of all refinance activity, a five-year high. The average rate-and-term refinance borrower in the first quarter carried a mortgage balance approaching $500,000 and a credit score of 764. The average prior loan duration among refinancers was just 19 months, indicating how refinance demand was “concentrated among relatively new borrowers,” ICE observed.
But mortgage servicers struggled to retain the refinance business of their more recent borrowers, ICE reported. Retention among borrowers refinancing out of 2022 to 2025 vintage loans fell to 40% from 44% in the fourth quarter, with the average rate-and-term refinancer lowering their monthly mortgage payment by $257 through a 0.97% reduction in their mortgage rate.
“Retention declined across both cash-out and rate-and-term refinances, with all major loan products posting quarter-over-quarter declines,” the report stated.
While mortgage rates have risen in recent weeks, they remained between 0.3% and 0.5% lower than year-ago levels in March and April, easing affordability constraints by increasing borrowers’ purchasing power and thereby putting upward pressure on home values.
Inflationary pressures and geopolitical volatility have subsequently pushed average mortgage rates on typical 30-year home loans back to the 6.4% range as of a week ago, according to Freddie Mac and Mortgage Bankers Association data.
Elevated rates have lowered the number of “in the money” borrowers who could reduce their existing mortgage rate by at least 0.75% — and therefore their monthly payments — from 5.4 million in late February to 2.7 million as of the end of April, ICE noted.
Even as mortgage rates climbed higher in March, purchase lock activity remained roughly 20% above year-ago levels, according to reporting from Optimal Blue. Annual home price growth ultimately rose 0.9% in April, slightly higher than the revised annual rate of 0.7% growth in March.
Describing the monthly home price gains as “modest by historical standards,” ICE noted that the April gains mark the largest annual growth since last August, pushing single-family prices up 1.1% year over year.
“On a seasonally adjusted basis, home prices rose 0.32% in the month, equivalent to a seasonally adjusted annualized rate of 3.9%,” read the report, “the strongest single-month growth rate in nearly two years.” While the second half of 2025 saw a seasonally adjusted annual growth rate of negative 0.1%, the first three months of 2026 have averaged 3.5%, portending a stark reversal in pricing trends.
The durability of the price gains remains in question, however, as affordability gains have waned.
“Home price growth accelerated in April as softer interest rates raised the ceiling on borrower affordability,” explained Andy Walden, head of mortgage and housing market research at ICE, in a statement accompanying Monday’s data release. “The key question now is whether that momentum can withstand the recent upward pressure on interest rates heading into the heart of the spring buying season.”