• Key Insight: The real reason mortgage rates suddenly dipped involves investor anxiety over tech sector profits.
• Expert Quote: "We think volumes will stay weak near term..." — Bose George, KBW
• Forward Look: Watch for potential U.S. strikes after the upcoming midterm elections. 

This week's dip in mortgage rates is no reason for originators to relax, and lenders that lean on servicing income are better positioned to ride out what comes next, according to analysts at Keefe, Bruyette & Woods.

Freddie Mac's Primary Mortgage Market Survey put the 30-year fixed rate mortgage at 7.32% for Oct. 22, 8 basis points lower than last week. It is the first decline since the end of August. but KBW expects volumes to stay weak with rates near post-2023 highs.

Any optimism is premature for two reasons, commented Kate Wood, NerdWallet's lending expert.

"One, a lot of the softening we saw was because investors started to get anxious about the level of profit tech companies are going to need to churn out to actually make money off of artificial intelligence," said Wood, pointing to the fact the high-interest corporate bonds supporting data centers will need at some point to be repaid.

"That nervousness abruptly had Treasuries once again looking like a safe harbor, driving prices up and yields (and mortgage rates) down," she continued.

On Thursday morning, the 10-year Treasury was 5.01%, 14 basis points lower than Wednesday's close. The yield has not been under 5% since Sept. 23.

For the same week last year, Freddie Mac had the 30-year FRM at 6.19%.

The 15-year FRM was 3 basis points lower, at 6.68%. At this time in 2025, this product averaged 5.44%.

Data provided by Optimal Blue put the 30-year fixed at just above 7.3% for Oct. 21, nearly 8 basis points lower than the previous week.

The Mortgage Bankers Association Weekly Application Survey reported a 9 basis point decrease in the conforming 30-year FRM, to 7.41% for the period ended Oct. 16.

"The housing market continues to face significant headwinds as elevated mortgage rates and affordability pressures keep many prospective buyers on the sidelines," MBA President and CEO Bob Broeksmit said in a Thursday morning statement. "Despite a small decline in rates last week, mortgage applications fell for the seventh consecutive week, with purchase activity 18% below last year's pace."

However, the Lender Price data posted on the National Mortgage News website on Thursday morning had the 30-year FRM at 7.76%, nearly 6 basis points higher than seven days prior.

The ongoing conflict with Iran is Wood's second reason for originators not to drop their guards just yet.

"There have been credible reports that the U.S. will resume strikes after the midterm elections," she said. "If that comes to pass, we'll likely see mortgage rates move higher."

Keefe, Bruyette & Woods, in a flash note put out after the WAS release, also was pessimistic on the mortgage market going forward.

"We think volumes will stay weak near term given rates at post-2023 highs, which should keep refinance activity depressed while purchase slows on both affordability and seasonality now that the selling season is over," Bose George wrote. "This backdrop should continue to pressure mortgage originators, but we remain positive on select servicing-heavy names where the risk-reward remains relatively compelling," pointing specifically to Rocket and Rithm.