Market Update,Wednesday, May 6, 2020
Origination flows were on the higher side again with dealers reporting a range of ~$6.0-$8.0B. The Fed purchase schedule today includes a maximum of $2.2B GNMA and then later a maximum of $3.960B FN30 year securities. Prepayment speeds will be released late this afternoon.
Market Update,Tuesday, May 5, 2020
Another day of heavy origination supply and lack of investor demand after the Fed purchases pushed them wider. Dealers were reporting a range of ~$7.5-$9.0B in origination supply for the day. The Fed purchase schedule today includes a maximum of $1.8B FN15 year and then later a maximum of $3.960B FN30 year securities.
Market Update,Monday, May 4, 2020
The Fed announced the purchase schedule for the week with a drop in average volume to ~ $6.0B a day vs the $8.0B a day from the prior week and it does not include the 30yr 2.0% coupon. In an informal survey of lenders, lock volumes remain strong with a slight increase week over week. The 30-year rate range fell between 2.875-3.75% with the majority around 3.25%.
Market Update,Thursday, April 30, 2020
Yesterday’s FOMC policy statement confirmed there are no plans to end the Fed trade purchase ops of MBS and treasuries in the near-term. Following the meeting, treasuries experienced a modest steepening of the curve and ended the day mixed. The 2yr yield declined (-0.01) to 0.20% while the 10yr yield rose (+0.02) to 0.63%.
Mortgages experienced another solid day on Wednesday, with the best performance coming from the 3.5% coupon. Origination flows spiked to $8.58B for the day and the 5-day moving average rose to $7.49B accordingly.
Market Update,Wednesday, April 29, 2020
Today’s economic calendar kicked off with MBA mortgage applications for the week ending April 24th , which posted a decline of -3.3% from the prior week. Purchases were actually up 11.6% week-over-week, but refis saw a -7.3% drop.
Treasuries reversed course on Tuesday and saw a bull flattening of the yield curve in advance of today’s Fed policy meeting. The 2yr yield was marginally lower (-0.01) at 0.21% while the 10yr yield dropped (-0.05) to 0.61%.
Market Update,Tuesday, April 28, 2020
The Federal Housing Finance Agency announced yesterday that borrowers will not be required to make lump-sum repayments at the end of the forbearance period for loans purchased by Fannie Mae and Freddie Mac. FHFA Director Mark Calabria stated, “During this national health emergency, no one should be worried about losing their home… while today’s statement only covers Fannie Mae and Freddie Mac mortgages, I encourage all mortgage lenders to adopt a similar approach.”
Market Update,Monday, April 27, 2020
Treasuries ended the day little-changed as demand remained consistent. Friday closed with the 10yr yield flat at 0.60% and the 2yr yield slightly up (+0.01) at 0.22%.
Mortgages had a strong start to the day with early out performance but began to fade relative to treasuries in the afternoon. The last Fed auction of the day was oversubscribed to the point that it hurt performance. Not long afterwards, this week’s Fed Ops schedule was released, with the maximum daily MBS purchases declining to roughly $8 billion.
Market Update,Friday, April 24, 2020
The market didn’t react all that much to any of yesterday’s news headlines or economic/earnings data. The prevailing 30yr fixed rate has been hovering around 3.25-3.375% and started to move away from the top end of that range yesterday. This caused the primary/secondary spread to compress into the 150-160bp range. This is a big difference from where the spread was on March 9th when primary rates were still in the 3.5-4% range and the implied secondary market rate for MBS plummeted (prices sank too), widening the spread out to >200bps.
Market Update, Thursday, April 23, 2020
Solid earnings in the morning sparked the rally in risk assets and it gradually picked up momentum throughout the day. Snapchat, Chipotle, and Texas Instruments were a few of the companies making headlines. Crude continues to rebound after a rocky start to the week. It’s interesting because the rally in crude (+37%) was driven by President Trump instructing the U.S. Navy to destroy Iranian gunboats if they harass American ships. The market is betting on friction in the Middle East to help undercut the oil glut. This should shed some light on how misaligned supply and demand are in oil right now.
LoanStream Included in Recent Non-QM Article by Debtwire
Lenders including LoanStream Mortgage, ACC Mortgage and First National Bank of America have maintained a non-QM presence, albeit with significant tightening of underwriting guidelines and higher rates. Notable for the lenders whose loans are often destined for portfolios is a marked drop in available loan-to-value ratios, to 70% or 75%, from levels as high as 95% for borrowers with compensating