October 2025 Data Highlights

Olivia DeLancey (: 00:20

Welcome to the Market Advantage podcast. I have Brennan O'Connell and Mike Vo here and they're ready to chat through data findings from October. But first we actually have some big and exciting news to share. So our Market Advantage podcast is actually going to be merging with Optimal Blue's other podcast known as Optimal Insights. Now you might follow that podcast, but if you're not familiar.

we do a weekly podcast. So our Optimal Insights podcast focuses on market indicators, economic insights. And the reason we'll actually be merging show with that one is because by doing so, we'll be able to give you this data each month a little bit sooner. So what you'll want to do is look for this segment embedded within Optimal Insights toward the beginning of the month. That way we'll give you a sneak peek into this data insights a little bit earlier, but you'll...

still want to stay tuned for the full Market Advantage data report, the second week of the month for the full Complete Insights that you're used to getting. So no change to the report, still the Complete Insights you're used to getting via email if you subscribe. And if you don't, be sure to do so via the link in our show notes. But to all those who are subscribed to our Market Advantage podcast, you'll want to be sure to subscribe to Optimal Insights going forward so that you don't miss the show. But with that in mind, Mike, Brennan, good to see you guys. How are you doing?

Mike Vough (: 01:42

You know, think we're all kind of mourning our Big Ten football teams right now. ⁓ Between Penn State, Wisconsin, and Nebraska. at least has a winning record, but bad news with the quarterback recently. the rest of us, we're kind of mourning here in Big Ten country.

Olivia DeLancey (: 01:47

Hahaha

Brennan O'Connell (: 01:58

lost a bet to Olivia here. She insisted that if at the midway point in the season, Nebraska was ahead of Penn State and Wisconsin, we would all have to wear our sweatshirts.

Olivia DeLancey (: 02:09

So Brennan says that, but this was actually his idea. He threw this out yesterday. He said, should we wear Big Ten sweatshirts? And Mike and I were all about it. So here we are representing our alma mater's and I never thought I would say this, but of these three teams, Nebraska is leading in conference rankings. Who'd thought? So.

Brennan O'Connell (: 02:12

Ha ha ha ha!

Mike Vough (: 02:33

Probably the most stable from a coaching perspective too, right now as well.

Olivia DeLancey (: 02:39

Also, who'd thought?

Brennan O'Connell (: 02:43

Shot across the body, you Luke Fickel, I guess. Should we jump in? ⁓ So the headline for October is that volume is down 4%, but that really has a lot more to do with the September comp than it does any sort of pullback in production. So September, you look at it, was highest month for production we've seen in the last three years. October was the second highest. So.

Mike Vough (: 02:47

You

Brennan O'Connell (: 03:07

We are, we are still in a very good place from a production standpoint on a year over year basis. October was up purchase volumes dropped a nominal 1.5 % that's expected during the seasonal slowdown that we see at this time of year. rate term refi is dropped 14 % off the September peak, but we're still up nearly 150 % year over year. So again, we're, still in a, in a very different place, very different environment from a production standpoint than we were.

% over the same time in: 2024

across, the end of September into the end of October. So finished the month at 6.16%. That's 63 bips better than the same time. last year FHA dropped four bips VA rates fell 15 and took off another 11 bips and finished the month at just a little, a little bit over 6.35%. I think, what's interesting. So we a rate cut in

October that was largely built in from a pricing perspective into the market. So the 10 year really didn't improve all that much from the end of September until the end of October. We just saw five basis point decrease in the 10 year treasury. But a lot of the pickup that we saw on the mortgage side was actually related to the spread. spread between the the primary rate in the mortgage market and the 10 year treasury fell 11 bips just over

st point that it's been since: 2022

picked up some share at the expense of VA. I think it's actually just sort of a timing dynamic. We see VA production in particular, URLs on the VA side increased very quickly as rates dropped. So think we saw this very material uptick in VA refis in September, which continued into October, but FHA and conforming sort of caught up there, maybe a touch behind in terms speed of refinance. And so as FHA and conforming,

the show. They, they took a little bit of market share and then really we were pretty the credit side of things or from an affordability perspective, both DTIs and first time home buyer percentages were flat. And finally, non QM share, which, you know, we continue to track. There's a secular trend towards, non QM non agency production. did see a little bit of growth there, driven primarily by.

some increases in both investor and bank statement loans. So I think all in another very productive month, something think was reflected. We were all out at the MBA conference in Vegas and I thought the energy out there was great, better than it has been in the last few years. And I think there's plenty of reason for that given what we're seeing in the numbers. Mike, pass it over to you for a few insights on maybe the secondary side of things.

Mike Vough (: 06:36

Yeah, I appreciate it, Brandon. I would echo that. think that the vibe at the annual MBA conference was pretty positive. more positive than some of the previous conferences in the last year or two. So I think things are trending up there to build off your point. Just starting with some of our secondary marketing trends, we saw on average, best effort versus mandatory spread, a smidge.

on the third year conforming down about two basis points. So still at 33 basis points of a spread there. So plenty of excess profit to be made for folks who want to hedge and then sell their loans in the secondary market. One of the big things that really jumped out to me though was the change that we observed in pull through over the course of the month. saw pull through for purchase loans a point.

from 83.5 to the big jump was in rate term refinances, where we saw the pull through increase almost 10%. So it was at 60 odd 60.18 to be exact, and end of the month almost 72%. So I think what we saw there was as rates kind of ticked up a little bit in October, we saw folks really get off the sidelines and

do a little less shopping around and really trying and make sure that rate that they locked that rate decrease in September, they actually got to the table and refied the course of the month of October. You think of that 30 to 45 day lag between application or lock till closing. And that makes a ton of sense given the directionality of rates this month. A couple other trends to note, continue to see MBS

share increase for loan sales. a year ago, this was about a third, a third, a third between bulk cash and mortgage-backed securities. But we see that share of lender securitizing now closer to 46 % of the overall loan sales observed in the system, where cash is down about 22 % aggregator bidding is down about 30%. Both of those down about 2 % over the course of the month.

And we still see that best effort share about two to 3 % of loan sales there. It's not really a lot of change there. Another area that also spoke to me was this continued trend of lenders selling to the rank one loan sale execution. About six to 12 months ago, this was 69, 70 odd percent of the time sold to rank one. It was 78 % last month, 81 % this month. So we're seeing...

Lenders really chase continue to chase that that profitability right there They're not thinking about some of the softer eligibility guidelines from a loan sale perspective Maybe they're even moving away from retaining servicing rights if it's not the rank one execution stat that I've been observing the last couple months that we want to add to the market advantage is the percentage of loans that are actually sold retained meaning that the lender is holding on to the servicing rights and the end of relationship with the borrower

versus selling it released, which means that they're selling the servicing rights and that touch point with the borrower to the investor. this month we saw quite a shift in September was 63 % of the loans sold were actually servicing retained. And it was 56 % this month. So a 7 % decrease in the amount of loans sold, which correlates to that trend of lenders kind of chasing that best price, of that addiction to cash, right? Cash today versus the promise of cashflow.

in the future with servicing rights. A couple other things to chat about, know, with on average, OVMMI up throughout the course of the month, we did see servicing right valuations increase about three basis points on Ending the month about 1.12 on a 25 BIP servicing rate, which is almost about four and a half percent multiple. think of that 1.13 divided by 25 basis points and you get almost four and a half from a multiple perspective.

You know, historically folks usually always grounded themselves to four multiple on servicing, right? 25 BIPs equal one point COVID that dropped almost down to two multiple, spiked closer to five and a half, six, couple, maybe about a year ago. And now it's in that four and a half range, just so folks get a feel for that. And then in general, we saw our investor count.

kind of again, stagnant at that 11 number, last four months, where on your average loan sale, lenders are interacting on average with 11 investors. And typically when we see that spike up or spike down, that's a good proxy for just the demand of mortgages out there.

Olivia DeLancey (: 11:22

Excellent, thanks guys. So those were the October highlights and as a reminder, if you subscribe to us here, be sure to subscribe to Optimal Insights by Optimal Blue going forward so that you can continue hearing the great highlights from Mike and Brennan going forward.