Market Insights | New Market Instrument Launch: Mortgage Rate Futures | Jan. 21, 2025

Optimal Insights - Real-Time Data and Capital Markets Insights - Optimal Blue

Welcome to Optimal Insights. In this episode, Optimal Blue experts discuss the launch of the Mortgage Rate (OB30C) futures contract. This capital markets instrument represents a significant advancement in hedging strategies for lenders, providing a new tool that directly relates to the primary mortgage rate.

Jim Glennon, Ben Larcombe, and Kevin Foley discuss the implications of this innovative financial instrument, which aims to enhance the efficiency of hedging mortgage rate pipelines.

Additionally, the speakers highlight recent positive inflation data and its impact on the bond market, illustrating the current economic landscape. Listeners are encouraged to consider the broader potential of the Mortgage Rate futures contract as part of their hedging strategies, with a focus on cost-effectiveness and long-term stability.

Takeaways:

• Recent inflation data has led to a rally in the bond market, easing rate hike concerns.
• The launch of the Mortgage Rate futures based on the 30-Year Fixed Rate Conforming Optimal Blue Mortgage Market Index (OBMMI) marks a significant innovation in mortgage rate hedging.
• Mortgage rate futures provide lenders with a new tool to hedge their pipelines effectively.
• Bill Pulte's nomination as FHFA director could influence homeownership and housing supply strategies.
• The OBMMI now offers intraday values, enhancing real-time market analysis for lenders.

About the Mortgage Rate futures:

• The CME Group launched the Mortgage Rate Futures on January 13, 2025
• These contracts are cash-settled and based on the 30-Year Fixed Rate Conforming Optimal Blue Mortgage Market Index (OBMMI).
• These futures contracts are designed to provide market participants with a precise and efficient tool for managing risk across mortgage pipelines, servicing rights, and securities
• They enable clients to trade the primary-secondary mortgage spread and gain margin offsets with other U.S. Treasury futures, TBA futures, and Eris SOFR swap futures.

More info: https://www2.optimalblue.com/cme-group-to-launch-mortgage-rate-futures-in-january-2025/

Tune in to gain valuable insights to help you stay ahead and maximize your profitability in the ever-evolving mortgage landscape. #OptimizeYourAdvantage #MaximizeProfitability

Hosts and Guests:

• Jim Glennon, VP of Hedging & Trading Client Services, Optimal Blue
• Ben Larcombe
• Kevin Foley

Production Team:

• Executive Producer: Sara Holtz
• Producer: Matt Gilhooly

Commentary included in the podcast shall not be construed as, nor is Optimal Blue providing, any legal, trading, hedging, or financial advice.

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Keywords: Real-time data insights, Capital markets commentary, Mortgage industry, Profitability, Lenders, Investors, Rate fluctuations, Mortgage landscape, Expert advice, Optimal Blue, Secondary marketing automation, Pricing accuracy, Margin protection, Risk management, Originators, Originations

Mentioned in this episode:

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