FRM Update

March 26, 2018



MBS yield spreads versus Treasuries widened as Treasury yields fell across the curve.  Mortgage rates rose last week continuing the trend higher this year, while mortgage applications fell for the first time in a month.  Refi apps fell 4.5% after falling 2.2% the prior week.  Refinance share of mortgage applications (38.5%) fell to the lowest level since 2008.  Housing reports released last week were mixed.  Existing home sales topped estimates, while new home sales fell for the third consecutive month.

 

MBS

 





CMOs

CMO yield spreads versus the Treasury curve were mixed last week as shorter structures widened 4 to 5bps, while longer CMO structures tightened 1 to 2 bps.  CMO yields of 3% or higher are attainable for typical bank-type structures.  Significant investor activity is focused on those structures that offer 3% yields or higher with weighted average lives typically ranging from two to five years (base case) and up to seven years (+300bps).  Investor activity has primarily been focused in front sequential and VADM structures with coupons typically ranging from 4% to 4.5%, with the majority of the activity last week focused on higher coupon front sequential structures.

 

 

 

Mortgage Rates and Refinance Activity

 

 

 

Housing

 

 

 

 



Dan Stimpson, CPA

Senior Vice President

Vining Sparks

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