ARM Update

August 27, 2018

In the latter part of last week, the ARMs sector was very quiet, as seasoned selling and August origination died down.  In total, approximately 1.5 billion in secondary ARM supply has come to market in August, around a billion of which came last week.  The wave of seasoned selling has been met with customer interest from a broad set of account types, but the sheer volume of supply, which has been roughly equal to a full month of origination, has weighed on longer reset spreads and caused ARMs to underperform fixed rates this month.

Last week, activity was primarily focused on the following:

The following chart reflects the week over week change in LIBOR option-adjusted spreads for ARMs. GNMA ARM OAS’s tightened, while FNMA and FHLMC OAS’s widened on shorter resets and tightened on resets greater than 5 years.

Ricky Brillard, CPA


Vining Sparks, IBG

The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
Copyright © 2021
This is a publication of Vining-Sparks IBG, L.P.
775 Ridge Lake Blvd., Memphis, TN 38120