The risk that mortgage brokers encounter in their business- i.e., provision of commitments to mortgage borrowers. It arises from adverse rate or volume changes that occur as a result of misestimation of rates, closures (on mortgage borrowers), or financing commitments to purchase mortgage loans. Pipeline risk arises while mortgages are in the pipeline.

The pipeline risk is typically managed by derivative instruments– e.g., purchasing options from mortgage lenders and guarantors.