FRM Update

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.

Trading Activity

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.

TBA-Eligible Securities:

Non-Deliverable Securities:

Specified 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

Vining Sparks

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