FRM Update

May 1, 2017

On Monday and Tuesday trading activity improved across the MBS and CMO sectors, but it faded during the latter half of the week. Yield spreads in 15yr and 30yr fixed MBS tightened 1 to 3bps to both Treasuries and swaps last week. 30yr mortgage rates reversed the recent trend and rose for the first time in over a month. Mortgage applications rose 2.7% led by a bump in refinance applications. The increase of 7.2% in refinancing inquiries was the largest weekly gain since early August of last year. April MBS prepayment speeds are expected to slow down due to reduction in day count, which should more than offset the seasonal increase in home sales.



Trading activity in CMOs was also light last week with minimal changes in yields and spreads as the availability of specific structures continues to limit activity with issuance remaining quite weak and finding specific structures to match inquiries remains a challenge. Depositories were focused on stable structures with 4- to 6-year average lives, especially sequential structures.

Rates and Refis



Dan Stimpson, CPA

Senior Vice President

Vining Sparks

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