FRM Update

June 28, 2021

Current Yield Spreads

Spreads on 15-year MBS (1.5s) tightened 8 bps to 41 bps during the past week, reversing the 4 bps of widening that occurred the previous week.  Spreads for 30-year MBS (2.0s) were stable at 50 bps.  Last week we heard from several Federal Reserve speakers about the housing market and possibility of tapering or ending the Fed’s current mortgage buying program.  Investors were unfazed by the chatter and seem to be convinced the central bank will tighten policy on a very gradual basis based on current MBS valuations. The market continues to be supported by financial institutions with significant liquidity from deposit inflows and spotty loan demand.

Trading Activity

The summary below reflects purchase activity from the previous week.  The most active trades were UMBS 15-year 1.5s and 20-year 2.0s.

TBA-Eligible Securities:

Non-Deliverable Securities:

Specified Pools:

Mortgage Rates and Applications

U.S. mortgage rates were mixed for the week ending 6/25 according to  The 15-year mortgage was higher by 1 bp to 2.44% and the 30-year mortgage rate declined 4 bps to 3.13%. Mortgage applications for the week ending 6/18 rose 2.1% despite the 30-year mortgage rates ticking up during the reporting period.  Purchase applications inched up 0.6% while refi apps gained 2.8%.  Both types of applications have weakened in 2021 and have since remained in a holding pattern.

Michael S. Erhardt, CPA

Senior Vice President, Investment Strategies

Vining Sparks IBG, LP

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