Trading Desk (901) 261-5950

Good morning! According to Fannie Mae’s Mortgage Lender Sentiment Survey for Q2 2021, lenders expect profit margins to decrease over the next three months, and this outlook has grown increasingly popular over the last three quarterly surveys. While demand for purchase mortgages has remained strong, refi demand has dropped significantly from its 2020 highs, and it will likely continue to do so. Between declining profit margins and the competitive nature of the mortgage origination market, it is no surprise that lenders loosened their credit standards to get a little more business in the month of May. The May number for the MBA’s Mortgage Credit Availability Index increased 1.4% from April to 129.9. Over in the secondary market, mortgage spreads have widened to their highest level in more than 9 weeks.

Currently, the 10yr. T-note is -12/32 to yield 1.49%, and the FNMA 30yr. fixed-rate 2.5% is trading at $103-12 to yield 1.72% with a +97 spread over the treasury curve. Thanks, and have a productive Monday!

Cherry Picks

ARMS / FLOATERS

Cost
Average Life
Yield
Speed
Spread
Coupon
MTR
Loans
Caps
Floor
1 Yr. Libor
WAM
Factor
$105-18
2.9 yr
0.49%
15% CPB
-8/z curve
2.497%
49
31
Periodic 2/2/5, Lifetime 7.497%
1.62%
+1.62%
349
.8277
$1.56mm Fannie Mae 5/1 ARM 2.497% #BP6432 7/50 stated final

10 Year Fixed

Cost
Average Life
Yield
Speed
Spread
Coupon
# Loans
Origination
Type
WAM
Factor
$104-06
3.2 yr
.63%
394 PSA
+26/I curve
2.00%
2,207
2021
Fannie Major
117
.9904
$10mm+ Fannie Mae 10yr am 2.00% #MA4368 5/31 stated final

15 Year Fixed

Cost
Average Life
Yield
Speed
Spread
Coupon
# Loans
Origination
Type
WAM
Factor
$103-22
4.2 yr
1.06%
252 PSA
+45/I curve
2.00%
17,096
2020
Fannie Major
166
.7572
$3mm 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
$102-12
5.9 yr
1.55%
204 PSA
+54/I curve
2.00%
17,393
2020/2021
Fannie Major
237
.9921
$1.3mm+ Fannie Mae 20yr am 2.00% #MA4333 5/41 stated final

30 Year Fixed

Cost
Average Life
Yield
Speed
Spread
Coupon
# Loans
Origination
Type
WAM
Factor
$106-06
4.4 yr
1.95%
377 SA
+129/I curve
3.50%
91
2020/2021
Fannie Major
354
.9378
$10mm Fannie Mae 30 yr am 3.50% #MA4296 2/51 stated final

Agency CMBS

Cost
Average Life
Yield
Speed
Coupon
Call Protection
Tier
GEO
DSCR
LTV
OCC
Factor
$105-04+
10.0 yr
1.65% + 10/swaps
0% CPY
2.19%
107mo Yield Maintenance
2
OH
1.33x
75.0%
94.4%
1.0000
$17.0mm FNMA 12/10 DUS #BL6689 2.19% coupon 5/2032 stated final

Agency CMO – 3 Year

Cost
Average Life
Yield
Speed
Spread
Collateral
Coupon
Band
Avg Life w/ rates +300
Factor
$103-30
3.1 yr
1.36%
262 PSA
+100/I curve
New Fannie 30yr 2.50%
2.50%
Busted PAC
6.4 yr
.6369
$5mm Fannie Mae "Busted PAC" 2.50% #FNR 20-20 DC 7/47 stated final

Agency CMO – 5 Year

Cost
Average Life
Yield
Speed
Spread
Collateral
Coupon
Band
Avg Life w/ rates +300
Factor
$106-22
4.4 yr
1.35%
263 PSA
+70/I curve
Seasoned FNMA 30yr 4.50%
3.00%
Pass-Thru
6.20 yr
.3873
$6.6mm+ Fannie Mae "Pass-Thru" 3.00% #FNR 17-72 B 9/47 stated final

Agency CMO – Long End

Cost
Average Life
Yield
Speed
Spread
Collateral
Coupon
Band
Avg Life w/ rates +300
Factor
$92-12
18.9 yr
2.51%
176 PSA
+40/I curve
New 30yr Jumbo 2.00%
2.00%
Sequential
18.9 yr
1.0000
$12mm Freddie Mac "Sequential" 2.00% #5083 ML 3/51 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.