Good morning, ladies and gentlemen, and welcome back! Over the last year, we have been tracking the rapid rise in home prices, often citing low inventory, high buyer demand, and expensive building materials as the primary causes. However, there is another contributing factor we would be remiss not to mention: the impact of institutional investors. Big firms with excess cash are taking advantage of high housing demand and price appreciation by snatching up properties for either renting or flipping. While this does result in mighty profit margins for builders, for average Americans, this just means more competition and even higher prices. The term bubble seems to be growing more and more applicable. We’ll have to wait and see if the end of the foreclosure moratorium and increasing mortgage rates bring the long-awaited pop.

The 10yr. T-note is +2/32 to yield 1.70%, and the FNMA 30yr. 2.5% is trading at $102-23+ to yield 2.00% with a +75 spread over the treasury curve. Thanks, and have a productive Monday!

Cherry Picks

ARMS / FLOATERS

Cost
$104-31+
$1.5mm+ Fannie Mae 5/1 ARM 2.492% #BP6432 7/50 stated final
Average Life
3.0 yr
Yield
0.75%
Speed
15% CPB
Spread
+10/z curve
Coupon
2.492%
WAM
352
MTR
53
Loans
34
Factor
.8773
Caps
2/2/5
Floor
1.62%
1 Yr. Libor
+1.62

10 Year Fixed

Cost
$103-26
$5mm+ Fannie Mae 10yr am 2.00% #MA4285 3/31 stated final
Average Life
3.1 yr
Yield
.71%
Speed
414 PSA
Spread
+36/I curve
Coupon
2.00%
# Loans
1,430
Origination
2020/2021
Type
Fannie Major
WAM
116
Factor
.9911

15 Year Fixed

Cost
$103-18
$10mm+ Fannie Mae Dwarf 2.00% #MA4095 8/35 stated final
Average Life
4.4 yr
Yield
1.14%
Speed
239 PSA
Spread
+43/I curve
Coupon
2.00%
# Loans
18,315
Origination
2020
Type
Fannie Major
WAM
170
Factor
.8350

20 Year Fixed

Cost
$104-31
$2mm+ Fannie Mae 20yr am 3.00% #MA3890 1/40 stated final
Average Life
3.5 yr
Yield
1.47%
Speed
384 PSA
Spread
+99/I curve
Coupon
3.00%
# Loans
2,944
Origination
2019
Type
Fannie Major
WAM
222
Factor
.5437

30 Year Fixed

Cost
$106-12
$10mm Fannie Mae 30 yr am 3.50% #MA3906 1/50 stated final
Average Life
3.6 yr
Yield
1.60%
Speed
406 PSA
Spread
+109/I curve
Coupon
3.50%
# Loans
4,196
Origination
2019
Type
Fannie Major
WAM
343
Factor
.5020

Agency CMBS

Cost
$103-31
$4.7mm FNMA 12/11.5 DUS #BL6356 2.26% coupon 4/2032 stated final
Average Life
10.6 yr
Yield
1.87% + 20/swaps
Speed
0% CPY
Coupon
2.26%
Call Protection
127mo Yield Maintenance
Tier
2
GEO
CO
DSCR
1.33x
LTV
63.4%
OCC
95.0%
Interest Only
49 months
Factor
1.0000

Agency CMO – 3 Year

Cost
$106-11
$10mm Fannie Mae "PAC" 3.00% #FNR 2016-80 JA 3/46 stated final
Average Life
3.3 yr
Yield
0.98%
Speed
376 PSA
Spread
+55/I curve
Collateral
Seasoned FNMA Jumbo 30yr 3.00%
Coupon
3.00%
Band
245-315 PAC Band
Avg Life w/ rates +300
5.5 yr
Factor
.4741

Agency CMO – 5 Year

Cost
$107-08
$20mm+ Freddie Mac "Sequential" 3.00% #FHR 4957 W 2/50 stated final
Average Life
6.4 yr
Yield
1.76%
Speed
359 PSA
Spread
+60/I curve
Collateral
New 30yr 3.00%
Coupon
3.00%
Band
Sequential
Avg Life w/ rates +300
14.7 yr
Factor
1.0000

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.