Trading Desk (901) 261-5950

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

10 Year Fixed

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

15 Year Fixed

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

20 Year Fixed

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

30 Year Fixed

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

Agency CMBS

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

Agency CMO – 3 Year

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

Agency CMO – 5 Year

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