MBA Newslink Premier Member Profile: Optimal Blue

(One in a continuing series of profiles of Premier Members of the Mortgage Bankers Association.)

–Please provide a brief description of your company

Optimal Blue is the housing industry’s only end-to-end capital markets platform, bridging the primary and secondary mortgage markets to give lenders greater control of their margins. Its mission is to help lenders maximize their profitability on every loan transaction while helping people achieve the dream of homeownership.

Optimal Blue’s technology and data offerings form a complete and scalable capital markets infrastructure. This spans from when a borrower looks into homes they can afford with accurate product and pricing options, to when a lender considers originating a mortgage, through processes like rate locking, counterparty oversight, pipeline hedging, securitization and trading, all the way through the valuation of mortgage servicing rights and portfolio monitoring for additional lead generation opportunities.

Through an API-first approach, the company brings together a network of hundreds of thousands of individual lenders, investors, brokers, and vendors to yield constant value by way of knowledge-sharing and real-time, competitive benchmarking. Further, Optimal Blue’s investment in advanced technologies such as cloud-based architecture, AI, and machine learning, enable lenders to benefit from unrivaled workflow efficiency and accuracy.

Optimal Blue facilitates $1.1 trillion in transactions annually. Its capital markets platform is used to price and lock 35% of mortgage originations nationwide, hedge and trade 40% of loans, and support 70% of MSR valuations. This network brings together hundreds of thousands individual lenders, investors, brokers, and vendors – including 70% of the top 500 lenders. And when more plug in, the network becomes even more beneficial to the broader community. This resource yields constant value by way of knowledge-sharing and real-time, competitive benchmarking. With these connections, lenders of all sizes and scopes operate profitably and efficiently to fulfill the momentous role of helping American borrowers achieve homeownership – regardless of market dynamics.

–Please provide a list of key senior personnel

Joe Tyrrell, CEO

Sara Holtz, CMO

Jim Glennon, VP of hedging and trading client services, host of Optimal Insights podcast

Brennan O’Connell, head of data, lead of Market Advantage data report and podcast

–What are some key trends your company is tracking?

Each month, Optimal Blue issues the Market Advantage mortgage data report (formerly the Originations Market Monitor) to provide insight into U.S. mortgage trends. Leveraging lender rate lock data from the Optimal Blue PPE – the mortgage industry’s most widely used product, pricing, and eligibility engine – the Market Advantage provides a view of early-stage origination activity. Unlike self-reported survey data, mortgage lock data is direct-source data that accurately reflects the in-process loans in lenders’ pipelines.

Key findings from the August 2024 Market Advantage mortgage data report include:

Refinance volume spikes and purchase volume falls: Refinances now account for 26% of total production, the highest level since March 2022, when the Federal Reserve began increasing interest rates. Rate-and-term refinance volume more than doubled in August, rising 109% MoM, while cash-out refinances also saw a more modest increase of 8%. Purchase volume fell by 10% MoM.

Mortgage rates decline: 30-year mortgage rates trended downward in August across all loan types, with the biggest shift in FHA rates, which fell by 40 bps to 6.13%, and the smallest shift occurring in conforming rates, which fell by 31 bps to 6.37%.

Narrowed spreads provide more refinance incentive: The 10-Year Treasury yield decreased by 18 bps to 3.91%, with the spread between the 10-Year Treasury and the 30-year conforming mortgage rate narrowing by 13 bps to 246 bps. This marks a significant improvement in the spread, which has fallen by over 50 bps from the same period last year.

Purchase counts reflect persisting challenges for homebuyers: Despite the increase in refinance activity, purchase lock counts – a key indicator of housing market conditions – dropped 16% YoY due to continued affordability and inventory challenges. Purchase locks are down 45% over August 2019.

2024 FHA and purchase borrowers’ credit scores at highest in seven years: Throughout 2024, monthly average credit scores have been higher than average for FHA borrowers (675.3), as well as for borrowers seeking purchase loans (736.4), than any other month dating back to January 2018, when Optimal Blue started tracking the data. The average credit score across all production in August 2024 was 731.

Loan amount and purchase price: The average loan amount rose from $369.1K to $372.4K, while the average purchase price fell from $471K to $465.5K.

–Why did your company join the Mortgage Bankers Association?

Optimal Blue has been a premium member of the MBA for years, and this relationship has proven strategic and mutually beneficial.

The MBA is the largest and most influential industry association representing the housing finance sector. Like Optimal Blue, the MBA produces a wealth of industry research, data, market insights, and educational resources that help members stay updated on the latest trends, regulatory changes, and best practices. As part of the MBA, Optimal Blue joins important industry discussions and collaborates with a wide network of potential clients, partners, regulators, and industry experts.

–How has being an MBA Premier Member benefited your company?

Both the MBA and Optimal Blue are advocates for helping lenders operate efficiently so they can better serve homebuyers. Through innovative technology, a network of interconnectivity, rich data insights, and expertise gathered over more than 20 years, Optimal Blue is an experienced partner that allows lenders to optimize their advantage from pricing accuracy to margin protection, and every step in between.

Under the strategic guidance of Optimal Blue’s leadership team, we have continuously enhanced our capital markets solutions to address the evolving needs of the mortgage industry. This vision led us to select MBA’s Secondary and Capital Markets Conference in May to launch our “Optimize Your Advantage” campaign, a comprehensive rebrand highlighting the value and innovation Optimal Blue delivers to clients through its end-to-end capital markets technology.

(MBA Premier Member Profiles are provided by the Mortgage Bankers Association and MBA NewsLink as a service to MBA Premier Members. Publication does not constitute an endorsement of a particular company, product or service. For more information about the MBA Premier Member program, contact Alicia Goncalves, CMB, Director of Associate Membership at MBA.)