ICE Introduces U.S. Residential Mortgage Rate Lock Index Futures


Intercontinental Exchange Inc. is launching its first mortgage futures contracts on June 13, 2022, subject to regulatory approval. The two futures contracts will be cash-settled and based on the ICE U.S. Conforming 30-year Fixed Mortgage Rate Lock Index and the ICE U.S. Jumbo 30-year Fixed Mortgage Rate Lock Index.

The indices are published daily and track U.S. residential mortgage loan applications where borrowers and lenders have committed to lock in the interest rate prior to closing. By being underpinned by primary market rates, the futures contracts offer investors a more refined hedge to manage exposure to U.S. residential mortgage rates than the existing suite of available products.

The primary market indices are part of a suite of 80 U.S. residential mortgage indices launched by ICE in October 2021, based on a daily data pool of tens of thousands of anonymized locked rate applications processed by ICE Mortgage Technology. ICE Mortgage Technology processes nearly half of all residential mortgages in the U.S. Securitized residential mortgages comprise about a third of the U.S. fixed income market, meaning that they occupy a large weighting in many fixed income portfolios institutionally and in the average American’s retirement portfolio.

“ICE Mortgage Technology’s industry leading network coverage allows it to deliver a unique risk management instrument based on actual mortgage lending activity across the U.S.,” says David Farrell, COO of ICE Futures U.S. “As inflationary pressures challenge all major economies and interest rates are being changed more frequently, we believe these mortgage futures will provide a better hedge to manage portfolio exposure to U.S. residential mortgage rates.”

The contracts will trade on ICE Futures U.S. and clear through ICE Clear U.S. The ICE U.S. Residential Mortgage Locked Rate Indices are available over the ICE Index Platform.

“This is the next step in how ICE is leveraging the rich data ICE Mortgage Technology receives from having the largest electronic network of mortgage stakeholders in the industry,” comments Joe Tyrrell, president of ICE Mortgage Technology. “ICE is combining this data with its technology and expertise within futures markets to create products to help customers in the mortgage lending and mortgage-backed security market to price, analyze and now manage risk associated with their mortgage exposure.”

Notify of
Inline Feedbacks
View all comments