Good morning! Collectively, MBS prepay speeds for the month of April dropped -21% vs. street expectations of -15%. In March of 2020, rates dropped significantly, prompting droves of borrowers to refinance their mortgages. As a result, prepay speeds shot up, making MBS an unattractive investment. Despite April’s drop in prepay speeds, MBS will likely remain unattractive for a little while longer. Because rates dropped back down below 3% in April, we may see prepay speeds go back up in May. In other news, mortgage servicing complaints have just hit a 3 year high, according to the CFPB. One of the primary complaints is that servicers are waiting until borrowers’ forbearances end before addressing their loss mitigation options, which borrowers often find complicated. Given that the foreclosure moratorium is set to end June 30th, it is crucial that servicers address these issues soon.
The 10yr. T-note is +2/32 to yield 1.54%, and the FNMA 30yr. 2.5% is trading at $104-06 to yield just under 1.66% with a +78 spread over the 5.7yr. Treasury curve. Thanks, and have a great weekend!
Cherry Picks
10 Year Fixed
15 Year Fixed
20 Year Fixed
30 Year Fixed
Agency CMBS
Agency CMO – 3 Year
Agency CMO – 5 Year
Agency CMO – Long End
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.
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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.
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