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.





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









Dan Stimpson, CPA

Senior Vice President

Vining Sparks

The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
Copyright © 2021
This is a publication of Vining-Sparks IBG, L.P.
775 Ridge Lake Blvd., Memphis, TN 38120