FRM Update

January 14, 2019

Yield spreads on current-coupon production compared to Treasuries were largely unchanged on a week-over-week basis. Valuations remain attractive for buyers based on the spread widening that occurred during much of 2018. Performance has been strong over the past month, with MBS outperforming most of the other fixed-income sectors.

Investors were extremely active last week with most of the buying concentrated in the 30-year sector.  Within that space there was buying of CRA paper, current-coupon production, HLTV loans, jumbo collateral, and single-issuer GNMA pools.  In the 15-year sector, the primary purchases were in current production 4.0’s and seasoned 2.5’s.  There was also some demand for seasoned 20-year 3.0’s and newer production 20-year 4.0’s.

The following represents a summary of the activity last week:

Mortgage Rates and Refinance Activity


Mortgage Apps: Lower interest rates sent mortgage applications surging higher last week.  Total applications surged 23.5% week-to-week to their highest levels since July 2018. The volume of refinance loan applications increased reflecting the highest level since February 2018 at 45.8% of total applications. The refinance share of mortgages was at 42.7% the previous week. The Refinance Index skyrocketed 35.0% from the prior week and the unadjusted Purchase Index climbed 59.0% from a week ago but was only 4% higher than the same week in 2018. The seasonally adjusted Purchase Index also significantly increased, rising 17% from the week before.

Michael S. Erhardt, CPA

Senior Vice President, Investment Strategies

Vining Sparks IBG, LP

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