Mortgage affordability improves in August, boosting refi incentive: ICE
Declining mortgage rates in August provided some relief for U.S. homebuyers and made it the most affordable month since February.
Of the 2.5 million “in-the-money“ mortgage holders as of Aug. 22, more than 60% took out their mortgages in the past two years, including 850,000 in 2023 and 560,000 this year. The average highly qualified candidate who took out a mortgage within the past two years could save $264 per month by refinancing at today’s prevailing rate, according to the newest Mortgage Monitor report released Wednesday by Intercontinental Exchange (ICE).
While purchase mortgage demand has recently seen a couple of its best weeks since mid-March, the rise was muted compared to early 2023 and 2024 when rates fell to similar levels.
“When it comes to affordability, as always, context is important: it still takes 10 percentage points more of the median income to buy the average house than it has on average over the last 30 years,” Andy Walden, vice president of research and analysis at ICE, said in the report.
”Our own ICE Market Trends data shows that prospective homebuyers are also facing record high down payments and credit scores among recent purchase mortgages,” he added. ”Affordability is still very much a challenge and that is likely to continue for the foreseeable future, but August’s improvement is certainly welcome progress.”
The average down payment on mortgaged home purchases hit a record $91,600 in July, up from $84,300 at the same time last year, ICE reported. This figure is up from $51,100 in July 2019, before the post-pandemic surge in home prices.
With mortgage rates dipping below 6.5% in the first week of August, the number of highly qualified refinance candidates more than doubled from just a few weeks earlier.
As of Aug. 22, about 2.5 million borrowers were in the money for a refinance. Of this group, 900,000 were considered highly qualified, meaning they held at least 20% equity in their homes, had credit scores of at least 720 and could save at least 75 basis points through a refinance.
These borrowers were quick to pounce on the downtick in rates. They pushed refinance-related rate locks to their highest levels in more than two years, up about 150% in a two-week period.
Rate-and-term refis drove roughly half of the refi activity amid falling rates, while cash-out activity increased only marginally.
Growing inventory and continuing soft demand led home prices to cool further in July, ICE reported, bringing the annual appreciation rate down to 3.6% in July compared to 4.1% in June.
On a seasonally adjusted basis, prices rose by 0.19% from June to July, equivalent to a seasonally adjusted annualized rate of 2.3%. ICE suggests potential further slowing in the annual growth rate over the next few months.
If the current pace of seasonally adjusted gains were to continue, it would result in annual home price growth cooling to a range of 3% to 3.5% over the next couple of months. Growth is likely to catch a modest tailwind in the fourth quarter due to softer data from late 2023.

“That said, purchase applications and rate locks will be worth watching closely in coming weeks to see how borrowers react to the modest improvement in rates and home affordability we’ve seen in recent weeks,” according to the report.
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