FRM Update

October 28, 2019


Yield spreads for current coupon MBS to Treasurys were mixed last week. 30-year MBS widened by 2 bps to 107 bps, while 15-year tightened 1 bp to 70 bps. MBS valuations remain compelling as spreads are currently near the top of the range observed this year. 15-year continue to be attractive versus 30-year (see graph below).

Activity was strong last week as investors continued to take advantage of compelling MBS valuations.  Newly issued 20-year 2.5s and 3.0s were the most heavily traded. The following is a list of actively traded sectors and coupons:


Mortgage Rates and Refinance Activity

Benchmark mortgage rates were mostly stable last week. 15-year mortgage held firm at 3.19%, while 30-year mortgage rates fell 2 bps to 3.78%.

Mortgage applications for the week ending October 18 fell 11.9% as purchase apps fell 3.6% and refi apps dropped 17.1%.  Removing some of the week-over-week volatility, the 4-week moving average for purchase applications fell 1.9% but remains near the middle of 2019 range.  The 4-week moving average for refinance applications remains 132% above its 2018 average.

Michael S. Erhardt, CPA

Senior Vice President, Investment Strategies

Vining Sparks IBG, LP

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