November 22, 2021
Current Yield Spreads
MBS yield spreads were mixed last week. Nominal yield spreads on current-coupon 15-year MBS to Treasurys widened 4 bps to 20 bps, while 30-year MBS spreads tightened 1 bp to 52 bps. Tight valuations on 15-year passthroughs have led many investors to shift buying activity to more defensive positions (10-year passthroughs) or to move further out on the curve where more yield spread can be found in 20- and 30-year passthroughs.
The summary below reflects customer purchase activity from the previous week. UMBS 20-year 2.0’s led activity but were closely followed by UMBS 10-year 1.5s. 10-year passthroughs have soared in popularity during the last several weeks as yields have risen above 1.00%. There’s also been an increase in selling activity with depositories cleaning up odd-lots and selling fast paying collateral.
- UMBS 10-year 1.5s & 2.0s
- UMBS 15-year 1.0s to 2.5s (1.5s the most traded)
- UMBS 20-year 1.5s & 3.0s (2.0s the most traded)
- UMBS 30-year 2.0s & 2.5s (2.0s the most traded)
- FNMA 30-year Jumbo 2.5s
- GNMA 15-year Jumbo 2.0s & 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 shows mortgage rates rose last week. 15-year rates increased by 11 bps to 2.51%, while 30-year rates climbed 13 bps to 3.20%. Mortgage applications for the week ending November 12 fell 2.8% as purchases applications gained 1.5% but refi applications fell 5.1%. Despite mortgage rates grinding higher since late July, purchase applications have also trended higher during that period.
Michael S. Erhardt, CPA
Senior Vice President, Investment Strategies