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Mortgage data provider Optimal Blue said Boston saw an increase in the take-up of mortgages as well as in mortgage amounts in January, signaling homebuyers are reentering the market amid gradual decline in interest rates, setting the stage for another year that drives home prices up.

The dollar volume of mortgage rate locks in Boston – a measure of homebuyers locking in mortgage rates ahead of closing dates of their home purchases – increased 26.7 percent compared to a month ago, according to Optimal Blue’s monthly Originations Market Monitor report.

Year-on-year, Boston’s share of the national volume of mortgage rate locks improved, climbing to 1.8 percent in January from 1.4 percent in the same month in 2023. Of the total Boston mortgages volume in January, 84 percent was purchase mortgages, while 16 percent was made up of refinancings.

“Over the last year, Boston has seen its share of mortgage lock volume rise in rank from #17 to #11 in the nation. At the same time, the city’s average loan amount has surged by 8.43 percent from $492,809 to $534,330. This growth significantly eclipses the national average, which only ticked upwards by 1.75 percent,” Brennan O’Connell, director of data solutions at Optimal Blue, said in a statement. “Taken together, these numbers highlight the strength of the Boston housing market even in the face of higher interest rates.”

During the month, data showed that Boston homebuyers had an average interest rate of 6.655 percent, and an average credit score of 747.

On a national level, mortgage locks increased by 36 percent month-on-month, as more people decided to buy homes and refinance their mortgages.

In 2023, most of the homebuyers stayed out of the market as the Federal Reserve raised interest rates multiple times, with the 30-year mortgage rates peaking at 7.79 percent in October. Since the start of the year, rates have gone down at 6-percent level, with the latest at 6.64 percent as of the week ending Feb. 8, according to Freddie Mac.

“The new year kicked off with continued rate relief and a 36 percent month-over-month gain in total lock volume, driven by a seasonal 38% increase in purchase lock volume,” O’Connell said. “We also saw the smallest year-over-year decline in purchase lock counts since May 2022, which may foreshadow a stabilizing market and friendlier lending environment in 2024.”

Optimal Blue said cash-out refinances increased 30 percent in January, while rate/term refinances also grew by 20 percent.

It added that after six consecutive months of decline, average home purchase price rebounded in January, jumping from $435,900 to $444,900. National average interest rate was at 6.548 percent and average credit score is at 727.71.