Cooler autumn weather typically coincides with cooling homebuyer activity and mortgage originations.

October’s mortgage activity reflected that seasonal trend, according to the latest Market Advantage report from Optimal Blue, with total mortgage rate lock volume falling 4% month over month. Purchase rate locks declined 1.5% from September and rate-and-term refinances dipped 14%.

But cash-out refinances rose 6% for the month, which “speaks to the market’s resilience,” according to Mike Vough, head of corporate strategy at Optimal Blue.

“Purchase activity held steady and refinance demand — particularly cash-outs — remained strong,” Vough observed in a press release. “Even after September’s record pace, October delivered another standout month for originations.”

September’s refinance wave was the largest since 2022, with the cash-out refinance share gaining 13% during the month. Refinances accounted for 37% of mortgage production volume in October, per the Optimal Blue report, which is down 176 basis points from September but up 11.4 points year over year.

In terms of product mix, loans backed by the Federal Housing Administration and those meeting Fannie Mae’s and Freddie Mac’s conforming limits gained market share, while loans backed by the U.S. Department of Veterans Affairs (VA) lost ground.

Optimal Blue attributed this trend to VA refinance activity reacting faster to interest rate reductions last month, “leading to a front-loading of VA locks in September.”

Non-qualified mortgage (non-QM) volume accounted for just shy of 8% of total originations, an improvement from September but still behind August’s record 8.34% mark.

Drilling into the non-QM mix, bank statement loans accounted for 34.8% of non-QM rate locks in October, up from 33.1% in September. Debt-service coverage ratio (DSCR) loans also rose in October to a 29.2% share from 28.2% the prior month.

In the non-QM secondary market, the report noted that lenders “continued to strengthen execution strategies” during October.

Agency mortgage-backed security (MBS) executions rose to 46% of hedged loan sales in October from 42% in September, while sales to aggregators and the Fannie and Freddie cash window fell by 100 basis points and 200 basis points, respectively.

“October’s secondary market data reflected clear strength in execution,” Vough noted. “Lenders leaned further into MBS sales and maintained access to top-tier pricing, signaling disciplined hedging and growing investor confidence.”