ICE Mortgage Monitor: Early-January Rate Decline Unlocks Refinance Opportunities
Early January mortgage rate declines unlocked refinance opportunities for nearly five million borrowers and helped push affordability to a four-year high, according to ICE Mortgage Technology, Atlanta.
“Even small reductions toward 6% rates can significantly boost affordability, particularly for homeowners who could refinance into a lower rate and monthly payments,” said Andy Walden, head of mortgage and housing market research at ICE. He said when rates hit 6.04% on January 9, the number of homeowners in the money to refinance jumped by 20% and affordability hit its best level in four years.
But that said, affordability remains “structurally challenged,” with home prices still elevated relative to incomes and meaningful differences emerging across regions and borrower segments, Walden added.
Key findings from the firm’s February Mortgage Monitor include:
• Refinance incentives surged to a nearly four-year high following early-January interest rate declines
On January 9, interest rates reached 6.04%, according to the ICE 30-year conforming fixed rate index, which put roughly 4.8 million borrowers “in the money” for a refinance — the highest level since early 2022.
That drop effectively increased the eligible population by 20% overnight. Although some of that benefit has since receded, the episode underscores how sensitive the market is to rate shifts in the high 5% to low 6% range.
ICE said nearly 1.3 million recently originated mortgages carry rates between 6.875% and 6.99%, including more than half a million from 2025, making it the most common rate band last year, and the most sensitive to interest rate drops.
• Housing affordability reached its best level since early 2022, but remains stretched by historical standards
In early January, the monthly principal and interest payment needed to purchase the average-priced home fell by $164 (a 7% drop) year over year to $2,091, reducing the share of median household income required to 27.8%. But despite the improvement, the national home price-to-income ratio remains elevated at roughly 4.8:1, well above its long-run average near 4:1, the report noted. To revert back to pre-pandemic home price-to-income ratios, household incomes would need to rise a little over 15%, assuming home prices remain flat.
• Negative equity is increasing modestly, concentrated in recent vintages and select Southern markets
More than 1.1 million borrowers ended 2025 underwater — that’s the highest level since early 2018 — with negative equity heavily concentrated among FHA and VA loans originated in 2022 or later.
• Home price growth slowed to its weakest pace in more than a decade, with regional divergence widening
U.S. home prices rose just 0.6% in 2025, marking the smallest calendar year growth since 2011. The Northeast and Midwest continue to provide stability, while price declines in the South and West are increasingly weighing on national averages, ICE said.
