Seasonal cooling offset by resilient refinance demand and rising agency MBS executions
PLANO, Texas /Massachusetts Newswire – National News/ — Optimal Blue today released its October 2025 Market Advantage mortgage data report, showing that rate-lock activity remained strong despite seasonal cooling and continued to outpace last year’s levels. Total lock volume fell 4.2% month over month (MoM) from September’s peak but was still up 18% year over year (YoY) as borrowers responded to improving affordability and narrower rate spreads.
Purchase locks declined just 1.5% in October, in line with typical seasonal patterns, while refinance lending remained a key driver of activity. Rate-and-term refinances fell 14% from September but stayed up 143% YoY, and cash-out refinances rose 6% MoM and 29% YoY.
The Optimal Blue Mortgage Market Indices (OBMMI) 30-year conforming fixed rate – the benchmark for CME Group’s Mortgage Rate futures – dropped another 16 basis points (bps) to 6.16%, marking its lowest level since late 2023.
“October’s data speaks to the market’s resilience,” said Mike Vough, head of corporate strategy at Optimal Blue. “Purchase activity held steady and refinance demand – particularly cash-outs – remained strong. Even after September’s record pace, October delivered another standout month for originations.”
Lenders continued to strengthen execution strategies in the secondary market during October. Sales to agency mortgage-backed securities (MBS) climbed 400 bps to 46%, extending a multi-month trend of large-lender securitization growth. Deliveries to the agency cash window fell 200 bps to 30%, while aggregator bulk and best-efforts channels each dipped 100 bps. The share of loans sold at the highest price tier rose to 81%, up 300 bps, underscoring lenders’ ability to capture premium pricing even as servicing values tightened. Mortgage servicing rights (MSRs) for conforming 30-year loans increased 3 bps to 1.12% (a 4.47 multiple), moving in line with an average 6-bps gain across OBMMI rates for the month.
“October’s secondary market data reflected clear strength in execution,” said Vough. “Lenders leaned further into MBS sales and maintained access to top-tier pricing, signaling disciplined hedging and growing investor confidence. With securitization share and pricing quality both on the rise, large lenders appear well positioned to sustain profitability as production remains steady.”
Key findings from the Market Advantage report, derived from direct-source mortgage lock and secondary market data, include:
VOLUME TRENDS AND MARKET COMPOSITION
* Refis stay elevated: Rate-and-term refinances fell 14% MoM but remained up 143% YoY, while cash-outs rose 6% MoM and 29% YoY. Refinance pull-through improved to 71.6%, up 11.4 points from September. Refinances accounted for 37% of all production in October, down 176 bps from September but up 11.4 points YoY.
* Purchases steady: Purchase locks declined 1.5% aligned to seasonal expectations, remaining strong relative to historical patterns. Purchase pull-through improved to 84.6%, up 91 bps from September.
* Non-QM share rises: Non-qualified mortgage share edged higher, driven by gains in both investor/debt-service-coverage-ratio (DSCR) and bank statement programs.
* FHA and conforming gain share: FHA and conforming production increased at the expense of primarily VA lending. VA refinance activity typically reacts fastest to rate reductions, leading to a front-loading of VA locks in September.
* Single-family share climbs: Single-family production rose relative to all other property types in October, reflecting sustained strength in owner-occupied lending.
RATES AND PRICING
* Mortgage rates decline: The OBMMI 30-year conforming fixed rate fell 16 bps to 6.16%, with FHA at 6.04%, VA at 5.67% and jumbo at 6.36%.
* Spread tightens to 10-year: The mortgage rate spread to the 10-year Treasury narrowed 11 bps to just over 200 bps, down 46 bps from 2024 and the tightest since early 2022. The 10-year yield itself fell only 5 bps to 4.11% as the Fed’s recent rate cut was largely priced into the market, indicating that most of the mortgage rate improvement stemmed from spread compression rather than a broader interest rate decline.
* Lender pricing strengthens: Lenders achieved higher overall pricing levels in October as spreads narrowed and execution improved across delivery channels.
* Servicing values recover: MSRs for conforming 30-year loans rose 3 bps to 1.12% (a 4.47 multiple).
CHANNEL AND EXECUTION
* Agency MBS execution expands: Share rose to 46% (+400 bps), while the agency cash window share of execution fell to 30% (-200 bps) and aggregator bulk and best efforts each dipped 100 bps.
* Investor count steady: The average number of active investors held at 11, reflecting stable liquidity conditions. Historical counts ranged from 8 in November 2024 to 12 in December 2024.
* Higher-tier pricing dominates: With 81% of loans sold at the highest pricing tier, lenders demonstrated disciplined execution strategies that offset margin pressure from rate compression.
PRODUCT MIX AND BORROWER PROFILES
* DTIs and affordability flat: Debt-to-income ratios and first-time homebuyer share held steady, signaling sideways affordability movement.
* Balanced composition: FHA and conforming production growth offset earlier VA surge, keeping overall mix diverse across loan types.
* Credit profiles, loan amounts dip: The average credit score fell to 734 from 735 MoM. The average loan amount decreased to $397,438 from $403,746. October loan averages ranged from $602,646 in metro New York to $312,177 in Indianapolis. Average loan-to-value (LTV) ratios ranged from 70% in San Francisco to 87% in San Antonio.
To view the full October 2025 Market Advantage report, complete the free subscription form: https://engage.optimalblue.com/market-advantage. Subscribers receive a report PDF each month with the latest data. Members of the press are eligible for special, advance access each month and should contact Olivia DeLancey to be added to the media list.
Access this month’s podcast episode: https://market-advantage.captivate.fm/episode/episode-14.
ABOUT THE MARKET ADVANTAGE REPORT
Optimal Blue issues the Market Advantage mortgage report each month to provide insight into U.S. mortgage trends and drivers of lending profitability. Data is sourced from the Optimal Blue PPE, which is used to price and lock more than one-third of all mortgages nationwide, and Optimal Blue’s hedging and loan trading system, which supports approximately 40% of loans hedged and sold into the secondary market. As the leader in mortgage capital markets technology, Optimal Blue has a direct view of both origination and secondary market activity and the interconnectedness of the two. Unlike self-reported survey data, Optimal Blue’s direct-source data accurately reflect the in-process loans in lenders’ pipelines and secondary market executions. Visit Optimal Blue’s website to subscribe to receive the free report each month.
Nothing herein shall be construed as, nor is Optimal Blue providing, any legal, trading, hedging or financial advice.
ABOUT OPTIMAL BLUE
Optimal Blue powers profitability across the mortgage capital markets ecosystem. As the industry’s only end-to-end capital markets platform, our technology, data, and integrations bridge the primary and secondary markets to help lenders of all sizes maximize performance – from pricing transparency and accuracy to pipeline risk management and every step in between. Backed by over 20 years of proven expertise, our modern, cloud-native technology delivers the real-time automation, actionable data, and seamless connectivity lenders need to navigate market volatility and scale for growth. To learn more about how Optimal Blue delivers measurable ROI, visit OptimalBlue.com.
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NEWS SOURCE: Optimal Blue. Story was sourced from a press release issued by Send2Press® and used with permission. View the original story at: https://www.send2press.com/wire/optimal-blue-report-october-lock-volume-holds-second-highest-level-in-three-years/
