What You Need to Know This Week: Reflections on 2024 | Optimal Insights | Dec. 16, 2024

In the December 16 episode of the Optimal Insights podcast, host Jim Glennon , VP of hedging and trading client services at Optimal Blue, is joined by Jeff McCarty , VP of hedging and trading product, and Alexander Hebner , hedge account manager and market specialist. Together, provided a comprehensive review of 2024 and shared valuable insights on the trends and events shaping the mortgage and housing industry.

Here’s what you need to know this week.

Key Insights and Trends

Economic Overview

? Stubborn Mortgage Rates: The Optimal Blue Mortgage Market Index (OBMMI) shows that conventional 30-year rates have been consistently around 6.7%, with volumes up 20-30% compared to last year.

? Rate Forecasts: Despite forecasts, rates have remained higher than expected, with a slight uptick towards the end of the year.

? Fed Rate Cuts: The Federal Reserve is expected to cut rates by 25 basis points, with future cuts likely paused until mid-2025.

"We are getting into the end of the year, so don't expect a lot of change in rates, especially with liquidity being pretty lean." – Jim Glennon

Major Themes of 2024

? Inflation Trends: Inflation remains a key concern, with core inflation at 3.3% and overall CPI at 2.7%.

? Geopolitical Impact: Despite significant global events, their impact on US markets has been minimal this year.

? Technological Advancements: AI has become ubiquitous, influencing various sectors, including the mortgage industry.

"AI is going to be at the top of the list for themes. No different in our industry. We've certainly embraced it at Optimal Blue." – Jeff McCarty

Federal Reserve Rate Cuts & Implications

The team discussed the Federal Reserve's rate cuts and their implications. Historically, rate cuts take six to eight months to impact the economy, and the Fed's cautious approach reflects ongoing inflation concerns.

The Fed's rate cuts are expected to keep policy restrictive, with rates remaining higher than historical averages. This has implications for mortgage rates and market liquidity.

Pros:

? Rate cuts can stimulate economic activity and potentially lower mortgage rates in the long term.

Cons:?

? Persistent inflation and high rates can dampen market activity and affordability.

Practical Actions You Can Take Today

? Monitor Rate Announcements: Stay updated on Fed announcements and market reactions to anticipate rate changes.

? Leverage Technology: Utilize AI and other technological advancements to streamline operations and improve efficiency.

? Engage with Industry Events: Participate in industry conferences like the Optimal Blue Summit to stay informed and network with peers.

Upcoming Events

? Optimal Blue Summit: Don’t miss the?Optimal Blue Summit?taking place from?February 3 – 5, 2025?in San Diego. This client-exclusive event will feature sessions on AI trends, profitability strategies, and market insights, along with panels from top industry leaders. Early-bird pricing is available until the end of the month, so be sure to register!

Use code AHEAD25 through Dec. 20 for a special discount to help you get ahead in 2025.

Summit.OptimalBlue.com

This episode of Optimal Insights provided a thorough review of 2024, highlighting key economic trends, the impact of Fed rate cuts, and the growing influence of AI in the mortgage industry.

For more information about these topics, listen to the full podcast episode on major platforms or watch the full episode on LinkedIn/YouTube.

Listen on all major podcast platforms: https://optimal-insights.captivate.fm/listen

Stay tuned for our next episode, where we’ll preview what to expect in 2025.

The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Optimal Blue, LLC.

How are you navigating the current trends in the mortgage industry? Share your experiences and strategies in the comments, and don’t forget to subscribe to the Optimal Insights podcast.