Good morning and welcome to 2022, it ought to be interesting! We start scheduled releases tomorrow with Wards auto sales. Today, we’re going to look at one story critical to battling the inflation on the Fed’s plate this year. During the pandemic, we’ve expressed concern over how J. Powell & Co. would tighten credit and raise rates with the debt at levels no Fed has ever had to work with before. The word being tossed around in the street is “hamstrung.” A decade of historically low-interest rates and runaway spending by an irresponsible Congress has made the national debt a problem, particularly if rates need to go up this year. Raising short-term rates is the Fed’s “go-to” inflation-fighting tool. The federal government’s debt is particularly susceptible to rising rates because so little of it is tied up on the long end of the yield curve. It won’t take long for rolling over the shorter maturity debt to cause a funding problem.

Last for today, borrowers buying homes set an all-time record in 2021 with 1.61 trillion in purchase loans issued. The previous high was 1.51 trillion in 2005. That’s all for this morning. Have a great day and call or email with your inquiries.

Cherry Picks

ARMS / FLOATERS

Cost
Average Life
Yield
Speed
Spread
Coupon
MTR
Loans
Caps
Floor
1 Yr. Libor
WAM
Factor
$102-21+
1.6 yr
1.26%
15% CPB
+30/z curve
2.702%
25
6,889
Periodic 5/2/5, Lifetime 8.002%
1.587%
+1.587%
296
.8671
$6.2mm Fannie Mae 7/1 ARM 2.702%, #BM6746, 11/49 stated final

10 Year Fixed

Cost
Average Life
Yield
Speed
Spread
Coupon
# Loans
Origination
Type
WAM
Factor
$103-01
3.2 yr
1.00%
332 PSA
+1/I curve
2.00%
1,300
2020
Fannie Major
112
.9537
$3mm+ Fannie Mae 10yr am 2.00%, #MA4425, 9/31 stated final

15 Year Fixed

Cost
Average Life
Yield
Speed
Spread
Coupon
# Loans
Origination
Type
WAM
Factor
$102-28
5.0 yr
1.37%
217 PSA
+16/I curve
2.00%
7,341
2021
Fannie Major
178
.9928
$8mm Fannie Mae Dwarf 2.00%, #MA4497, 11/36 stated final

20 Year Fixed

Cost
Average Life
Yield
Speed
Spread
Coupon
# Loans
Origination
Type
WAM
Factor
$101-16
5.5 yr
1.69%
227 PSA
+43/I curve
2.00%
9,073
2021
Fannie Major
237
.9970
$7mm+ Fannie Mae 20yr am 2.00%, #MA4474, 11/41 stated final

30 Year Fixed

Cost
Average Life
Yield
Speed
Spread
Coupon
# Loans
Origination
Type
WAM
Factor
$102-18
6.2 yr
2.02%
248 PSA
+71/I curve
2.50%
42,621
2021
Fannie Major
358
.9970
$10mm Fannie Mae 30 yr am 2.50%, #MA4493, 12/51 stated final

Agency CMBS

Cost
Average Life
Yield
Speed
Coupon
Call Protection
Tier
GEO
DSCR
LTV
OCC
Interest Only Until
Factor
$101-02
11.6 yr
1.85% + 30/swaps
0% CPY
1.93%
134mo Yield Maintenance
3
AL
--
65%
95%
104 Months
1.0000
$5.9mm+ FNMA 12/11.5 DUS #BS2644, 1.93% coupon, 8/2033 stated final

Agency CMO – 3 Year

Cost
Average Life
Yield
Speed
Spread
Collateral
Coupon
Band
Avg Life w/ rates +300
Factor
$103-10
4.0 yr
1.58%
341 PSA
+50/I curve
New Fannie 30yr 3.50%
2.50%
Busted PAC
8.5 yr
.4909
$5mm Freddie Mac "Busted PAC" 2.50%, FHR 4926 BL, 10/49 stated final

Agency CMO – 5 Year

Cost
Average Life
Yield
Speed
Spread
Collateral
Coupon
Band
Avg Life w/ rates +300
Interest Only until
Factor
$105-29
6.3 yr
1.97%
453 PSA
+65/I curve
New FNMA 30yr Jumbo 3.00%
3.00%
AD Busted PAC
18.4 yr
5/25
1.0000
$6.6mm+ Fannie Mae "AD Busted PAC" 3.00%, #FNR 20-11 JW, 3/50 stated final

Agency CMO – Long End

Cost
Average Life
Yield
Speed
Spread
Collateral
Coupon
Band
Avg Life w/ rates +300
Interest Only until
Factor
$96-30
18.0 yr
2.21%
153 PSA
+45/I curve
New 30yr Jumbo 2.00%
2.00%
137-263 PAC
19.6 yr
5/36
1.0000
$4.7mm Freddie Mac "AD PAC" 2.00%, #FHR 5055 PL, 12/50 stated final

Jim Tait is a registered representative with and offers securities through Hanover Securities, Inc. (Hanover), Member FINRA & SIPC. Although this information has been obtained from sources we believe reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Securities that may be shown are subject to availability and changes in price. Past performance is not indicative of future results. Changes in any assumptions may have a material effect on projected results.

 This information from Hanover Securities is for your private use and does not constitute an offer or solicitation with respect to the sale of any security. This information was obtained from sources we believe to be reliable but we do not represent that it is accurate or complete, and it should not be relied on as such. Certain transactions may give rise to substantial risk and are not suitable for all investors. This information was based on current market indicators which may vary over time. We may from time to time buy or sell, or have long or short positions in securities identical or related to those identified herein. 

Although this information has been obtained from sources we believe reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Loans and/or Securities which may be shown are subject to availability and changes in price. Past performance is not indicative of future results. Changes in any assumptions may have a material effect on projected results. This information from Banes Capital Group (BCG) and/or Hanover Securities is for your private use, and was obtained from sources we believe to be reliable. However, we do not represent that this information is accurate or complete, and it should not be relied on as such. This information is for institutional investors only, and as such certain transactions may give rise to substantial risk and are not suitable for all investors. This information was based on current market indicators which may vary over time. We may from time to time buy or sell, or have long or short positions in loans or securities identical or related to those identified herein. 

The pricing of loans or any Level II or III asset is inherently an exercise in quantifying uncertain variables. As such, great care should be taken when pricing loans for reporting purposes. The information included herein should never be taken as the sole method, or even a method to be relied on, for the pricing of loans or other Level II or III assets as this is for informational purposes only.