June 9, 2020 - Market Update

Mortgage origination volume came in at $7.77B to start the week, slightly below the five-day average of $8.17B.

In yesterday’s Federal Reserve MBS Purchase Operations, the Fed purchased, $780M FNCL 2.0%, $1.716B FNCL 2.5% and $474M FNCL 3.0%.  In Ginnie Maes, the Fed purchased $1.17B 2.5% and $330M 3.0%.  Federal Reserve MBS purchase operations scheduled for today include 15-year Uniform MBS 2.0% and 2.5%, totaling $1.575B, and 30-year Uniform MBS 2.0-3.0%, totaling $2.97B.

Optimism continued to buoy markets on Monday as analysis showed that lockdown measures may have prevented half a billion infections worldwide, while more states have pivoted to begin reopening.  New York City began the largest reopening in the US, with up to an estimated 400,000 people returning to public workspaces — albeit with masks and social distancing.  On a day when economists announced that a US recession had begun in February, US equities continued the distinctively “V”-shaped rally, with the Dow Jones Industrial Average Index closing up +461.46 points (up 1.70%) at 27572.44, the S&P 500 Index up +38.46 points (+1.20%) at 3232.39, and the NASDAQ Composite Index up +110.67 points (1.13%) at 9924.75.

US treasuries followed equities higher in price and lower in yield yesterday, with the 10-year benchmark closing at  0.875% yield ahead of today’s $29B 10-year auction.

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased from 8.46% of servicers’ portfolio volume in the prior week to 8.53% as of May 31, 2020. According to MBA’s estimate, almost 4.3 million homeowners are now in forbearance plans. 

Key findings of MBA’s Forbearance and Call Volume Survey – May 25 to May 31, 2020

• Total loans in forbearance grew by 7 basis points relative to the prior week: 8.46% to 8.53%.
  • By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior week: from 11.82% to 11.83%.
  • The share of Fannie Mae and Freddie Mac loans in forbearance increased relative to the prior week: from 6.39% to 6.40%.
  • The share of other loans (e.g., private-label securities and portfolio loans) in forbearance increased the most by investor type and relative to the prior week: from 9.67% to 10.03%.
• Loans in forbearance as a share of servicing portfolio volume (#) as of May 31, 2020:
  • Total: 8.53% (previous week: 8.46%)
  • IMBs: 8.39% (previous week: 8.21%)
  • Depositories: 9.18% (previous week: 9.19%)