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.
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.
- UMBS 10-year 1.5s
- UMBS 15-year 1.0s to 2.5s (1.5s the most traded)
- UMBS 20-year 1.5s to 2.5s (2.0s the most traded)
- UMBS 30-year 2.0s
- FNMA 30-year Jumbo 2.0s & 2.5s (2.0s the most traded)
- GNMA 15-year Jumbo 1.5s & 2.5s
- GNMA 30-year Jumbo 2.0s
- Low loan balance pools with a maximum loan amount ranging from $85k to $175k, and pools with NY collateral
- Custom CRA 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