FRM Update

November 1, 2021

Current Yield Spreads

Mortgages outperformed Treasurys for the fourth consecutive week as financial institutions and the Fed continue to lend strong support to the basis against slower origination volumes. Nominal yield spreads on both current coupon 15- and 30-year MBS to Treasurys tightened 6 bps to 17 bps and 50 bps, respectively.

Trading Activity

The summary below reflects customer purchase activity from the previous week. UMBS 20-year 2.0s led trading activity followed closely by UMBS 15-year 1.5s.

TBA-Eligible Securities:

Non-Deliverable Securities:

Specified Pools:

Mortgage Rates and Applications

Mortgage rates declined slightly last week according to Bankrate’s most recent survey. 15-year rates fell 2 bps to 2.44%, while 30-year mortgage rates decreased 5 bps to 3.14%. Refinancing activity eased for a fifth week to the lowest level since January 2020. The 1.6% drop last week increased the decline over those five weeks to 18.4% and left the index 42% below a late-January peak. Nonetheless, overall mortgage applications inched up 0.3% as purchase applications recovered 3.5% following a 4.9% decline. Purchase applications are down less than 3.0% over the five-week period in which rates rose and are down 20.7% from a January peak. Like most housing data, purchase applications are below stronger levels from earlier in the pandemic but remain above pre-pandemic readings.

Michael S. Erhardt, CPA

Senior Vice President, Investment Strategies

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.
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