March 14, 2022
Current Yield Spreads
The Treasury market sold off last week and yields climbed steadily across the curve. The 5-year Treasury increased 31 bps to 1.95% and the 10-year yield increased 26 bps to 1.99%, the largest weekly move since September 2019. Nominal yield spreads on 15-year MBS current coupon production tightened 6 bps to 37 bps, while yield spreads on 30-year MBS to Treasurys with similar duration were stable at 101 bps.
The summary below reflects customer purchase activity from the previous week. Activity was focused on UMBS 15-year and 20-year passthroughs. The most prevalent coupons in the 15-year sector were 1.5s to 2.5s while customers favored 2.5s and 3.0s in the 20-year sector. There was also decent activity in specified pools (lower loan balance, NY, FL) as payups have declined on collateral with these characteristics.
Mortgage Rates & Applications
Mortgage rates rose this week after dropping the previous week. The 30-year rate increased 23 bps to 4.33% and the 15-year rate increased 16 bps to 3.56%. Mortgage rates have now risen over 100 bps this year.
Mortgage applications for the week ending March 4 rebounded 8.5% as mortgage rates took a breather from their run higher this year. Both refinance and purchase applications increased for the first time in 5 weeks. Purchase applications gained 8.6% while refinances gained 8.5%.
Michael S. Erhardt, CPA
Senior Vice President, Investment Strategies