FRM Update

September 18, 2017

Mortgage rates and Treasury yields rose last week; however, MBS did not sell off nearly as much as the Treasury market, resulting in a tightening of mortgage yield spreads. Mortgage applications rose to the highest level since the election increasing 9.9%. No housing reports were released last week. The report to watch this week will be existing home sales on Wednesday given the recent weakness in both new and existing sales data, and further details on the unwind of QE from the FOMC meeting Wednesday. As to the balance sheet plans, there appears to be unanimity on the committee to begin now.



Trading in CMOs was steady last week with generally unchanged to slightly tighter yield spreads in certain CMO structures. Depositories continue to focus on stable structures with 4- to 6-year average lives. CMO issuance totaled approximately $14B in August, consistent with prior month levels. Investors were active in CMOs backed by Relo collateral with 3% coupons and in 3.5% squared sequential structures.

Mortgage Rates and Refinance Activity


No housing reports were released last week; however, this week’s calendar is a housing-heavy week with reports on homebuilder confidence (Mon), new starts and permits (Tue), existing home sales (Wed), and FHFA home prices (Thu).┬áThe report to watch will be Wednesday’s existing home sales given the recent weakness in both new and existing sales data.

Dan Stimpson, CPA

Senior Vice President

Vining Sparks

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