Good morning! Last month, the MBA’s Mortgage Credit Availability Index (MCAI) increased 0.6% to 125.4. The onset of the pandemic resulted in a significant pullback in mortgage credit, so the rise in the MCAI shows relaxation on the part of lenders. The most notable increase came from the Jumbo MCAI, which rose a whopping 1.5%. The Conventional MCAI, which looks at loans not backed by the government, came in second at +0.8%. The Government MCAI, which includes USDA, VA, and FHA loans saw a more moderate increase of 0.4%, and the Conforming MCAI, which tracks Fannie Mae and Freddie Mac loans, just barely increased by 0.02%. Lenders are faced with a difficult and delicate task: trying to make credit as widely available as possible while also screening out unqualified borrowers.

The 10yr. T-note is -2/32 to yield 1.65%, and the FNMA 30yr. 2.5% is trading at $103-01 to yield 1.94% with a +76 spread over the treasury curve. Thanks, and have a wonderful weekend!

Cherry Picks

ARMS / FLOATERS

Cost
$105-01+
$1.5mm+ Fannie Mae 5/1 ARM 2.492% #BP6432 7/50 stated final
Average Life
2.95 yr
Yield
0.70%
Speed
15% CPB
Spread
+2/z curve
Coupon
2.492%
WAM
351
MTR
51
Loans
33
Factor
.8587
Caps
2/2/5
Floor
1.62%
1 Yr. Libor
+1.62

10 Year Fixed

Cost
$104-00
$5mm+ Fannie Mae 10yr am 2.00% #MA4285 3/31 stated final
Average Life
3.1 yr
Yield
.66%
Speed
390 PSA
Spread
+28/I curve
Coupon
2.00%
# Loans
1,430
Origination
2020/2021
Type
Fannie Major
WAM
115
Factor
.9803

15 Year Fixed

Cost
$103-10
$2.2mm+ Fannie Mae Dwarf 2.00% #MA4095 8/35 stated final
Average Life
4.5 yr
Yield
1.22%
Speed
220 PSA
Spread
+46/I curve
Coupon
2.00%
# Loans
17,731
Origination
2020
Type
Fannie Major
WAM
169
Factor
.7989

20 Year Fixed

Cost
$102-00
$10mm+ Fannie Mae 20yr am 2.00% #MA4333 5/41 stated final
Average Life
6.5 yr
Yield
1.65%
Speed
171 PSA
Spread
+42/I curve
Coupon
2.00%
# Loans
7,643
Origination
2020/2021
Type
Fannie Major
WAM
239
Factor
1.0000

30 Year Fixed

Cost
$106-06
$10mm Fannie Mae 30 yr am 3.50% #MA3906 1/50 stated final
Average Life
4.0 yr
Yield
1.82%
Speed
357 PSA
Spread
+119/I curve
Coupon
3.50%
# Loans
3,894
Origination
2019
Type
Fannie Major
WAM
342
Factor
.4647

Agency CMBS

Cost
$100-22+
$2.0mm FNMA 12/11.5 DUS #BL1521 1.975% coupon 3/2033 stated final
Average Life
10.6 yr
Yield
1.92% + 20/swaps
Speed
0% CPY
Coupon
1.975%
Call Protection
137mo Yield Maintenance
Tier
2
GEO
KS
DSCR
Pending
LTV
67.9%
OCC
95.0%
Factor
.9987

Agency CMO – 3 Year

Cost
$103-16
$10mm Fannie Mae "Pass-Thru" 2.50% #5101 AM 2/47 stated final
Average Life
2.6 yr
Yield
1.06%
Speed
361 PSA
Spread
+80/I curve
Collateral
Mod-Seasoned Freddie 30yr 4.00%
Coupon
2.50%
Band
Pass-Thru
Avg Life w/ rates +300
6.06 yr
Factor
.9207

Agency CMO – 5 Year

Cost
$105-25
$6.6mm+ Freddie Mac "Pass-Thru" 3.00% #FNR 12-112 DA 10/42 stated final
Average Life
4.5 yr
Yield
1.60%
Speed
270 PSA
Spread
+85/I curve
Collateral
Seasoned Mixed
Coupon
3.00%
Band
Pass-Thru
Avg Life w/ rates +300
6.53 yr
Factor
.2550

Agency CMO – Long End

Cost
$93-28
$12mm+ Freddie Mac "Sequential" 2.00% #5083 ML 3/51 stated final
Average Life
16.1 yr
Yield
2.47%
Speed
152 PSA
Spread
+45/I curve
Collateral
New 30yr 2.00%
Coupon
2.00%
Band
Sequential
Avg Life w/ rates +300
20 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.