November 15, 2021
Current Yield Spreads
MBS yield spreads were mixed last week as the Treasury market sold-off in response to a 6.2% year-over-year increase in the consumer price index, the largest inflation surge in more than three decades. Nominal yield spreads on current coupon 15-year MBS to Treasurys tightened 3 bps to 16 bps, while 30-year MBS spreads widened by 2 bps to 53 bps.
The summary below reflects customer purchase activity from the previous week. UMBS 20-year 2.0s led activity followed by a strong surge in UMBS 10-year 1.5s. We also observed an increase in selling activity with depositories cleaning up odd-lots and selling fast paying collateral.
- UMBS 10-year 1.5s
- UMBS 15-year 1.0s to 2.5s (1.5s the most traded)
- UMBS 20-year 1.5s & 2.0s (2.0s the most traded)
- UMBS 30-year 2.0s
- FNMA 30-year Jumbo 2.0s & 2.5s
- GNMA 15-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, FL, and TX.
- Custom CRA Pools
Mortgage Rates and Applications
Bankrate’s most recent survey indicates mortgage rates declined meaningfully last week. 15-year rates fell by 8 bps to 2.40%, while 30-year rates decreased 9 bps to 3.07%. 15-year mortgage rates are just 15 bps above the all-time low of 2.25% reached in early August.
Mortgage applications for the week ending November 5 bounced 5.5% after declining 3.3% during the previous week. Refi activity increased 7.4% and purchase applications increased 2.7%. Refinancing comprised 63.5% of mortgage applications, with an average loan size of $300k.
Michael S. Erhardt, CPA
Senior Vice President, Investment Strategies