FRM Update

January 29, 2018

Mortgage related security yields increased last week continuing the trend higher this year, as treasury yields and mortgage rates have pushed higher. Mortgage yield spreads versus Treasuries widened last week as 30yr Treasury yields versus 30yr MBS moved slightly higher and are currently in the upper end of the trading range so far for 2018. This increase in MBS yields drove 30-year mortgage rates 4bps higher last week and 25bps higher this year. The MBA Refi Index increased for a third consecutive week, rising 0.9% to 1326, but remains slightly below its 12-month average of 1344. Refinance activity continues to be historically low and range-bound. New and existing homes sales slowed in December, but sales in the fourth quarter were the strongest quarter of last year.





CMO yields have increased and for typical bank-type structures range from 2.75% to 3.00% or higher, while CMO yield spreads tightened a basis point in various types of structures last week. Investor activity is focused on structures that offer 3% yields and weighted average lives around five years.



Mortgage Rates and Refinance Activity



New and Existing Homes Sales Slowed More than Expected in December and November Revised Lower; Q4 Still the Strongest Quarter in 2017



Dan Stimpson, CPA

Senior Vice President

Vining Sparks

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