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.
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.
- UMBS 10-year 1.5s & 2.0s
- UMBS 15-year 1.5s to 3.0s (1.5s the most traded)
- UMBS 20-year 2.0s to 2.5s (2.0s the most traded)
- UMBS 30-year 3.5s
- FNMA 30-year Jumbo 2.0s
- GNMA 15-year Jumbo 2.0s & 2.5s
- GNMA 30-year Jumbo 2.5s
- Low loan balance pools with a maximum loan amount ranging from $85k to $200k and pools collateralized with loans sourced from NY and TX.
- Custom CRA 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