FRM Update

September 13, 2021

Current Yield Spreads

Nominal yield spreads on 15-year MBS (1.5s) to Treasurys with similar duration tightened by 5 bps to 35 bps, while yield spreads on 30-year MBS (2.0s) tightened 2 bps to 70 bps.

Trading Activity

The summary below reflects customer purchase activity from the previous week. Activity was led by UMBS 20-year 2.0s followed by UMBS 15-year 1.5s. The pace of trading in non-deliverable securities declined as the sector has become more expensive over the past couple of weeks.

TBA-Eligible Securities:

Non-Deliverable Securities:

Specified Pools:

Mortgage Rates and Applications

U.S. mortgage rates drifted lower last week according to Both 15- and 30-year mortgage rates decreased 3 bps to 2.31% and 3.01%, respectively. Mortgage rates have essentially been in a holding pattern for most of the summer with the 30-year averaging 3.06% since the beginning of June. Meanwhile, mortgage applications remain soft despite low mortgage rates.  According to the latest data from the Mortgage Bankers Association, mortgage applications for the week ending September 3 fell 1.9% as refi applications dropped 2.8% and purchase applications ticked down 0.2%. Despite continued low rates, weekly mortgage applications have shown little evidence of a resumption of the housing boom.  While refi applications remain above their historical norm, they are also 28% below their January average.  Purchase applications are mildly lower than their average over the past 30 years.

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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