FRM Update

October 4, 2021

Current Yield Spreads

The MBS sector finished September on a positive note by outperforming Treasuries for the week and the month.  Nominal yield spreads on 15-year MBS (1.5s) to Treasurys with similar duration tightened by 2 bp to 36 bps, while yield spreads on 30-year MBS (2.0s) tightened 6 bps to 68 bps.

Trading Activity

The summary below reflects customer purchase activity from the previous week. Activity was strong and led UMBS 20-year 2.0s followed by GNMA 15-year Jumbo 2.5s.

TBA-Eligible Securities:

Non-Deliverable Securities:

Specified Pools:

Mortgage Rates and Applications

Mortgage rates shot higher last week according to Bankrate’s most recent survey. The 15-year rate increased 16 bps to 2.46% while the 30-year rate was higher by 14 bps to 3.18%.  Total mortgage applications fell 1.1% during the week of September 24. Purchase applications slipped 1.2% after jumping nearly 10% over the prior two weeks and refinancing activity pulled back 0.9%. Despite the small decline in the purchase index, the four-week average improved for a sixth week.

Michael S. Erhardt, CPA

Senior Vice President, Investment Strategies

Vining Sparks IBG, LP

The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
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