Good morning and happy hump day! Scheduled housing news came in this morning and we got Mortgage Applications for the week ending Oct. 15th. It came in a -6.3%, making it down 3 of the past 4 weeks. In other news today, the FHFA announced that both the GSE’s (Freddie and Fannie) would be expanding their footprints for what qualifies as a low-to-moderate income loan from 80% to 100% of AMI (Area Median Income) as they expand their refi businesses. It’s unknown presently if the new definition will also apply to CRA credits. The objective here is to be more inclusive for those that make just above the 80% median and were being left behind in the refinance market.

We now know why the builders are so bullish: There are more housing units under construction now than at any time since 1974!

In the bond market today 10yr T-Notes are unchanged to yield 1.63%. In MBS 30yr FNMA 2.50% are +1/32 to $102-16, which gives us a 1.95% yield and a +77 spread to the 5.2yr treasury curve. MBS and loan questions are our specialty, shoot us an email or call us and let us answer them!

Cherry Picks

ARMS / FLOATERS

Cost
Average Life
Yield
Speed
Spread
Coupon
MTR
Loans
Caps
Floor
1 Yr. Libor
WAM
Factor
$104-01+
3.4 yr
1.61%
15% CPB
+60/z curve
2.971%
62
46
Periodic 5/2/5, Lifetime 7.971%
1.622%
+1.622%
338
.7731
$1.98mm+ Fannie Mae 7/1 ARM 2.971%, #841231, 4/50 stated final

10 Year Fixed

Cost
Average Life
Yield
Speed
Spread
Coupon
# Loans
Origination
Type
WAM
Factor
$103-28
2.7 yr
.48%
353 PSA
-7/I curve
2.00%
2,015
2020
Fannie Mae
100
.6762
$3mm+ Fannie Mae 10yr am 2.00%, #MA4091, 8/30 stated final

15 Year Fixed

Cost
Average Life
Yield
Speed
Spread
Coupon
# Loans
Origination
Type
WAM
Factor
$103-08
4.4 yr
1.21%
235 PSA
+25/I curve
2.00%
15,254
2020/2021
Fannie Mae
169
.9966
$4.25mm Fannie Mae Dwarf 2.00%, #MA4279, 3/36 stated final

20 Year Fixed

Cost
Average Life
Yield
Speed
Spread
Coupon
# Loans
Origination
Type
WAM
Factor
$102-04
5.4 yr
1.54%
242 PSA
+41/I curve
2.00%
7,515
2021
Fannie Mae
238
.9966
$5mm+ Fannie Mae 20yr am 2.00%, #MA4446, 10/41 stated final

30 Year Fixed

Cost
Average Life
Yield
Speed
Spread
Coupon
# Loans
Origination
Type
WAM
Factor
$103-04
5.4 yr
1.84%
304 PSA
+71/I curve
2.50%
34,631
2021
Fannie Major
357
.9953
$10mm Fannie Mae 30 yr am 2.50%, #MA4438, 10/51 stated final

Agency CMBS

Cost
Average Life
Yield
Speed
Coupon
Call Protection
Tier
GEO
DSCR
LTV
OCC
Factor
$100-17
11.5 yr
1.88% + 25/swaps
0% CPY
1.91%
137mo Yield Maintenance
2
NH
--
79.4%
95%
1.0000
$11.0mm+ FNMA 12/11.5 DUS #BS3024, 1.91% coupon, 9/2033 stated final

Agency CMO – 3 Year

Cost
Average Life
Yield
Speed
Spread
Collateral
Coupon
Band
Avg Life w/ rates +300
Factor
$103-16
3.5 yr
1.42%
385 PSA
+65/I curve
New Fannie 30yr 3.50%
2.50%
Busted PAC
19.2 yr
.5332
$5mm Freddie Mac "Busted PAC" 2.50%, FHR 4926 BL, 10/49 stated final

Agency CMO – 5 Year

Cost
Average Life
Yield
Speed
Spread
Collateral
Coupon
Band
Avg Life w/ rates +300
Interest Only until
Factor
$105-08
5.7 yr
1.99%
385 PSA
+80/I curve
New FNMA 30yr Jumbo 3.00%
3.00%
No Band
19.2 yr
3/50
1.0000
$6.6mm+ Fannie Mae "AD Busted PAC" 3.00%, #FNR 20-11 JW, 3/50 stated final

Agency CMO – Long End

Cost
Average Life
Yield
Speed
Spread
Collateral
Coupon
Band
Avg Life w/ rates +300
Interest Only until
Factor
$95-05
18.1 yr
2.33%
178 PSA
+40/I curve
New 30yr Jumbo 2.00%
2.00%
124-270 PAC
19.0 yr
12/50
1.0000
$4.7mm Freddie Mac "AD PAC" 2.00%, #FHR 5055 PL, 12/50 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.