FRM Update

September 23, 2019


Yield spreads for current coupon MBS to Treasuries were mixed last week as the overall Treasury market increased in price. 30-year MBS tightened by 3 bps to 98 bps, while 15-year widened 4 bps to 69 bps. Yield spreads on mortgage product remain at multi-year highs, as shown on the graph below.  Over the past year, yield spreads on 15-year MBS have increased over 80%, from 38 bps to 69 bps, which has helped mitigate a portion of the reduction in Treasury yields.

Activity was steady last week as investors continued to focus on adding 15- and 20-year MBS. The following is a list of actively traded sectors and coupons:


Mortgage Rates and Refinance Activity

Benchmark mortgage rates decreased last week. 15-year mortgage rates fell 4 bps to 3.21%, while 30-year mortgage rates decreased 4 bps to 3.75%.

Total mortgage application volume was flat for the week, down a slight 0.1%, according to the Mortgage Bankers Association’s seasonally-adjusted index. Volume was still 67% higher than the same week one year ago, when rates were much higher. Applications to refinance a home loan fell 4% for the week but were 148% higher annually. Overall volume has been strong since July, when rates began falling sharply.

Michael S. Erhardt, CPA

Senior Vice President, Investment Strategies

Vining Sparks IBG, LP

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