FRM Update

April 17, 2017



Fixed Rate Mortgage Market Update

 

For Monday through Wednesday, trading activity improved across the MBS and CMO sectors last week, fading Thursday with the early close and Friday holiday. Prices moved sharply higher with the overall bond market rally. Yield spreads in 15yr and 30yr fixed MBS widened 1 to 3bps to both Treasuries and swaps last week. 30yr mortgage rates fell another 2bps last week and have declined 24bps YTD and are currently at their lowest levels of 2017. Mortgage applications reversed the recent trend and rose for the first time in almost a month, increasing 1.5% from higher purchase application activity. April MBS prepayment speeds are expected to slow down due to reduction in day count, which should more than offset the seasonal increase in home sales.


MBS



 


CMOs

CMO activity seemed to just start to get going last week in time to be curtailed by the holiday. Finding specific structures to match inquiries remains a challenge as issuance volume remains light. Bid list inquiries and swap activity picked up some as prices rose. Depositories still seemed focused on stable structures with 4- to 5.5-year average lives, especially VADM type structures.


Rates and Refis


 


 


 

Dan Stimpson, CPA

Senior Vice President

Vining Sparks

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