• Rising mortgage interest rates in February resulted in a decrease in the total number of mortgages nationwide.
• Florida saw a slightly larger decrease in overall mortgage activity compared to the rest of the country.
• Demand from homebuyers increased by 4% in February, but the overall drop was driven by refinance activity, down 11%.

Mortgage interest rates rose in February after a brief dip, which resulted in a drop in the total number of mortgages taken out nationwide – with a slightly more pronounced decrease in Florida compared to the rest of the country as a whole – according to the latest report on the U.S. mortgage market, issued by Jacksonville-based Black Knight, Inc.  The monthly report provides an overview of the current state of the national housing market, including information on mortgage rates, loan demand, and loan types.

Black Knight’s data shows that Florida’s largest metro areas slipped down the national list for homebuying or refinance activity over the last 30 days. The comparison is based on “rate lock” activity, which analysts rely on to spot trends in real estate, banking, and the overall health of the economy. The Miami – Fort Lauderdale – Palm Beach metro area slipped from 9th to 10th in the nation between January and February. Meanwhile, the Tampa – St. Petersburg – Clearwater metro also charted down one place to 15th nationally, and the Orlando – Kissimmee – Sanford market fell out of the National Top 20, after charting 19th the month prior.

The report shows that the number of loans taken out by homebuyers and refinancers decreased overall in February as a result of rising mortgage rates. However, certain mortgage products saw a rise in demand, particularly from buyers who took out larger loans, saw a rise in demand, as certain non-conforming mortgage rates were more favorable than for those who took out traditional loans.

Notably, demand from homebuyers actually increased by 4% last month, which Black Knight attributes as “likely due to seasonal factors.” However, lenders reported that borrowers looking to refinance their home mortgages, known as a “cash-out refinance,” dropped by 11% for the month, accounting for an overall drop.

“Mortgage rates ticked up again in February after a brief respite, showing once again just how rate-sensitive the market continues to be,” said Kevin McMahon, president of Optimal Blue, a division of Black Knight. “Essentially, though, the story remains the same – one of a market facing significant interest rate-driven headwinds.”

McMahon noted that when interest rates dipped briefly toward 6 percent, the mortgage market saw a flurry of activity that faded quickly when rates went back up.

“As rates resumed their upward trajectory in February, borrowers responded predictably, moving toward more rate-favorable offerings,” McMahon noted. “That included a shift to jumbos, ARMs and other nonconforming products in the month. With refinance activity basically at a floor, all eyes are on the purchase market.”

Jumbo mortgages are non-conforming loans that are larger than the purchase price required for the property, and often are less expensive than traditional government-sponsored mortgages, while ARMs – adjustable rate mortgages – are often more attractive to home buyers in certain situations because they can be cheaper than fixed mortgages, but they can also be unpredictable.