The latest episode of Optimal Insights brings those dynamics into focus, with Alex Hebner and James Cahill delivering the market update, followed by Jim Glennon and Mike Vough hosting a main segment conversation with Julie May, vice president and general manager of B2B Scores at FICO.
Here’s what you need to know this week.
Market Update
Incremental Movement, Familiar Constraints
Mortgage rates remain range‑bound, but not static. While the 10‑year Treasury continues to trade in a relatively tight band, mortgage‑Treasury spreads have narrowed modestly, contributing to slightly improved borrower pricing.
Key themes from the market update include:
Average locked mortgage rates have moved just above 6%, down from earlier January levels, according to Optimal Blue Mortgage Market Indices® data.
Refinance activity has increased in response, supporting solid volume through the first half of Q1.
Inflation remains persistent but stable, while labor market data continues to signal resilience rather than contraction.
With an FOMC meeting ahead, expectations remain aligned with no near‑term policy change, reinforcing a steady – if constrained – mortgage rate environment.
Credit Scores and Risk Consistency in Mortgage
In the special guest segment, Jim Glennon and Mike Vough sit down with FICO's Julie May to discuss credit scoring’s role in maintaining consistency across the mortgage ecosystem.
May outlined how standardized credit scores function not only as an underwriting tool, but as a shared risk framework used by originators, investors, insurers, servicers, and rating agencies. That consistency, she noted, is particularly important in a market where mortgage risk is broadly distributed beyond the point of origination.
The conversation also addressed recent attention around “lender choice” in credit scores. While often framed as a competitive enhancement, May emphasized that different scoring models – though built on similar bureau data – use different methodologies and do not rank risk identically.
In practice, selecting among multiple scores can introduce adverse selection, shifting higher‑risk borrowers into lower‑risk pricing tiers and reducing overall risk transparency. In a system as interconnected as mortgage finance, that fragmentation can have downstream implications for pricing, performance, and market stability.
Innovation, Applied Carefully
The discussion also highlighted advances in credit analytics, including the use of trended data and cash‑flow‑based models. These tools can help sharpen underwriting and expand access, particularly in non‑agency and non‑QM lending.
Julie May notes: The key distinction: innovation works best when layered onto a consistent benchmark, rather than replacing it. A common risk language remains essential for clarity across the mortgage life cycle.
Practical Takeaways for Mortgage Professionals
Mortgage‑Treasury spreads will remain an important driver of borrower pricing.
Affordability discussions are increasingly focused on targeted mechanisms rather than structural change.
Credit score innovation continues to evolve, with growing emphasis on balancing precision with consistency.
For a deeper exploration of these trends and insights, listen to the full episode of Optimal Insights. Available on all major podcast platforms: https://optimal-insights.captivate.fm/listen
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.