FRM Update

July 16, 2018

MBS spreads remained stable to both Treasuries and Swaps this week. The yield curve continued its flattening trend with 2s/10s opening at 28bps and closing 3bps lower at 25bps, which is the lowest level since 2007.

The average rates on 30-year fixed and 15-year fixed mortgages remained relatively stable during the past week.  Meanwhile, mortgage applications reversed course and increased 6.5% from one week earlier. Despite total applications rising, the refinance index decreased 4.0% from the week earlier with the index remaining below 1000.  This is the lowest level of refinance activity since December 2000.


Activity picked up last week with investors focusing on the following:


Mortgage Rates and Refinance Activity




Mortgage Applications: Mortgage applications for the week ending July 6 rose 2.5% on a 6.5% gain in purchase apps and a 3.8% decline in refi apps.  Mortgage rates have pulled back fractionally over the past two weeks with the 30-year mortgage rate falling from 4.39% to 4.37%.  While this is hardly enough of a move to elicit an increase in mortgage activity, the strength in purchase activity remains apparent and points to a short-term bump of approximately 5% for home sales.






Michael S. Erhardt, CPA

Senior Vice President

Investment Strategist

Vining Sparks, IBG

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